During Asian trading hours on Monday, the euro traded narrowly against the U.S. dollar around the 1.1820 level. Although the EUR/USD pair staged a notable rebound from a key technical area last Friday, accompanied by a broad recovery in risk assets, it still recorded a second consecutive weekly decline. Looking ahead, the U.S. Non-Farm Payrolls report scheduled for release on Wednesday is expected to be the primary influence on the pair's movement in the coming week.

What drove the U.S. dollar's strength last week? Last week, buying interest in the dollar was primarily fueled by risk-averse sentiment, which weighed on metals for most of the period. It was not until Friday, with the emergence of bargain-hunting, that the market exhibited a delayed reaction to the weaker labor market data released earlier in the week, leading to an adjustment in the dollar's trajectory. On Monday during the Asian session, the U.S. dollar index hovered narrowly near 97.60.

What will market participants focus on this week? A downward reassessment of U.S. interest rate expectations has tempered the momentum of the dollar's defensive rebound from last week. This could leave the currency vulnerable leading up to the release of the U.S. employment data on Wednesday, where the consensus forecast is for a net addition of approximately 70,000 jobs. Concurrently, the European Central Bank appears comfortable with the current EUR/USD exchange rate level. Should the employment data fall short of expectations or fail to show surprising strength, the EUR/USD pair could likely retest the 1.2000 psychological level. From the Eurozone perspective, there are few significant market-moving events anticipated this week.

Weekly Technical Outlook for EUR/USD On the daily chart last Friday, the EUR/USD pair formed a bullish engulfing candlestick pattern. The support level materialized precisely within the critical technical zone of 1.1750-1.1765, an area that previously acted as resistance and marked the breakout level in late January. The pair also found additional support from the 21-day Exponential Moving Average (EMA) at 1.1794, which continues its upward trajectory and remains firmly above the 200-day EMA at 1.1533. This objectively indicates that the overall trend remains bullish.

Key EUR/USD Levels to Watch This Week The core question now is: what comes next? To the upside, initial resistance is situated near 1.1835, which aligns with the low point of a weekly inverted hammer candlestick pattern formed several weeks ago. A decisive break above this level would suggest weakening selling pressure, potentially triggering short covering and fueling a more robust upward move. Further resistance lies in the 1.1900-1.1920 zone. A breach above this band would open the path towards the next psychological barrier at 1.2000, followed by this year's high of 1.2081, which constitute the near-term key upside targets. On the downside, a breakdown below the crucial support band between 1.1750 and 1.1770 could see the pair decline towards the 200-day EMA, currently positioned around 1.1533. A breach of this moving average would expose the pair to a move towards the 1.1500 level, with little substantial support in between.

Summary of the EUR/USD Outlook In summary, the technical trend objectively remains bullish, with the pair currently trading steadily above its major moving averages and maintaining a clear structure of higher highs and higher lows. However, the next significant directional move for the pair is likely to depend heavily on the employment report due on Wednesday, which is expected to play a pivotal role in determining the U.S. dollar's short-term trajectory. As of 11:19 Beijing time, the euro was trading at 1.1822/23 against the U.S. dollar.