EUR/USD Technical Analysis – January 7, 2026
Original article by: Mahmoud Abdallah – DailyForex.com
Link to the original article: https://www.dailyforex.com/forex-technical-analysis/2026/01/eurusd-analysis-7-january-2026/239517
Overview
The EUR/USD currency pair showed relatively weak performance in the aftermath of the latest US employment data, capped by the release of the Non-Farm Payroll (NFP) report for December. This macro indicator remains critical for gauging the Federal Reserve’s next moves and the broader health of the US economy. Volatility in the EUR/USD pair surged following the release, reflecting market uncertainty toward interest rate expectations and overall risk sentiment. This article analyzes recent movements in the EUR/USD pair, outlines key technical levels, and assesses potential scenarios for traders focusing on near-term to mid-term market dynamics.
Summary of the Latest Economic Catalyst
The December non-farm payroll data revealed that the US economy added 216,000 jobs during the month, easily surpassing expectations of 170,000. However, the labor force participation rate saw a decline to 62.5 percent, and the unemployment rate held steady at 3.7 percent. These figures had a mixed effect on the dollar and the EUR/USD pair, primarily because while headline job creation looked strong, underlying data such as participation weakened.
Additional reactions to the report included changes in bond yields, a rally in the US dollar, and fluctuations across major asset classes. For the EUR/USD, the pair rebounded slightly after an initial dip but failed to sustain any upside momentum. Indeed, despite recent economic headwinds for the eurozone, the euro has remained somewhat resilient due to market skepticism about how quickly the Fed might cut rates in 2026.
Key Highlights from Price Action
– The EUR/USD pair opened the week near 1.0930 levels and faced strong resistance around the 1.1000 psychological threshold.
– It briefly rallied following the payrolls report but failed to break higher, indicating exhaustion among buyers.
– The pair closed the session near the 1.0940 level, reflecting an overall lack of conviction in either direction.
– Daily volatility remains heavily influenced by interest rate expectations and trader positioning around macro announcements.
Technical Analysis
Short-Term Chart Observations
On the hourly chart, the EUR/USD has demonstrated constricted momentum and bearish pressure in recent sessions. The pair has remained trapped within a narrow channel bound by support at 1.0880 and resistance at 1.1000. These levels indicate trader hesitation and uncertainty regarding future macro direction.
– Support: Immediate support lies at 1.0880, with extended support near 1.0830 and, subsequently, at 1.0785.
– Resistance: Initial resistance is at 1.1000, followed by 1.1050, and then a mid-term resistance zone near 1.1100.
Key Technical Indicators
– Relative Strength Index (RSI): On the daily chart, the RSI hovers in neutral territory around 50, suggesting a lack of momentum in either direction.
– Moving Averages: The 50-day SMA continues to act as dynamic resistance near 1.0955, while the 200-day SMA lies further down near 1.0850.
– MACD (Moving Average Convergence Divergence): While the MACD remains slightly above the signal line, bullish momentum is fading, inconsistent with any significant continuation to the upside.
Fibonacci Retracements and Forward Projections
Based on the Fibonacci retracement drawn from the recent high near 1.1140 to the December low around 1.0720:
– 23.6% Fibonacci retracement is around 1.0825
– 38.2% level lies near 1.0880
– 50% retracement calibr
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