- Risk aversion fueled the underperforming euro, despite broad-based US dollar strength.
- The US labor market continues to strengthen, adding 428,000 jobs to the economy.
- EUR/USD Price Forecast: Long-term biased to the downside, but the 1 hour chart shows the pair as neutral to the upside.
The EUR/USD trimmed some of Thursday’s losses and is poised to end the week on the right foot, overcoming four straight weeks of losses amid a risk-off environment in financial markets. At 1.0552, EUR/USD is up 0.13%.
Sentiment remains negative, as reflected in US stocks, extending their losses for the second day in a row. Earlier in the American session, the US Department of Labor released the non-farm payrolls report for April, which showed that the US economy added 428,000 jobs, more than the 391,000 forecast by the analysts. Job gains were led by leisure, hospitality, manufacturing, transportation and warehousing.
The Unemployment Rate was unchanged at 3.6%, and Average Hourly Earnings increased 5.5% year-over-year, down from 5.6% from last month’s previous reading.
“Nothing in today’s jobs report would change the Fed’s expected path… current market sentiment doesn’t place much confidence that the Fed will control inflation without a recession,” according to sources quoted by Reuters.
Analysts at ING wrote in a note that “the unemployment rate held steady at 3.6% instead of falling to 3.5% as expected, which in combination with a softer average hourly earnings figure of 0.3% per month rather than the 0.4% consensus forecast (and slower than the 0.5% gain in March) can be taken as a sign of less inflationary pressures in the labor market.”
Meanwhile, the US Dollar Index, a measure of the dollar’s value against a basket of six currencies, is paring early-day losses, up 0.11%, currently at 103.664, while the US Treasury yield at 10 years reached a year-to-date high of about 3,131%.
EUR/USD Price Forecast: Technical Outlook
From a daily chart perspective, EUR/USD remains biased to the downside. Despite Friday’s price action, which favored the shared currency, the major remains vulnerable to further selling pressure, despite efforts by ECB members to boost the EUR.
The short-term 1 hour chart shows EUR/USD as neutral with a bullish bias. The 50 hourly simple moving average (HSMA) crossed the 100 SMA, a bullish sign, but the almost horizontal slope maintains the EUR/USD range boundary.
To the upside, the first resistance for EUR/USD would be the April 2017 high around 1.0569. Breaking above would expose Friday’s daily high below 1.0600, followed by the R1 daily pivot at 1.0620. On the downside, the first support for the EUR/USD would be the 200 SMA at 1.0550. A break of the latter would expose the February 2017 low at 1.0494, followed by the S1 daily pivot at 1.0470 and then 1.0450.
Technical levels
Source: Fx Street
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