EUR / USD retreats towards 1.1750 zone after NFP

  • EUR / USD regains traction to the downside near 1.1750.
  • US nonfarm payrolls surprised to the upside in March.
  • The US unemployment rate fell to 6.0% last month.

The common currency remains on the defensive and leads the EUR / USD pair to give up some ground and revisit the region e 1.1750 good Friday.

EUR / USD does not retest the e 1.1800 level

EUR / USD now reverses two consecutive daily rises, with the bullish attempt depleting just below the key round level of 1.1800, hinting at the idea that the rebound lacks sustainability and thus exposing the pair to the resumption of the downtrend.

The pair now faces increasing downward pressure amid a spike in buying interest in the US dollar then stellar US NFP nonfarm payroll numbers.

In fact, the US economy added 916,000 new jobs last month, largely exceeding forecasts, while the February figure was also revised upward. Adding to the optimistic tone, the unemployment rate fell to 6.0% from 6.2% in the previous month.

A small (disappointing?) Rally in the participation rate puts an end to the positive tone, while average hourly earnings fell short of estimates, contracting 0.1% on the month and expanding 4.2% year-over-year.

Despite strong NFP non-farm payroll figures, nearly 8.5 million people are still unemployed from February 2020 figures, while the lower unemployment rate is minimized by the decline in the participation rate.

What can we expect around the EUR?

EUR / USD found decent resistance near the 1.1800 region so far this week. The sharp pullback in the pair seen lately came along with the persistent buying bias around the dollar, which has been weighing on the pair’s constructive outlook in recent weeks. The deterioration of morale in the eurozone, along with the slow pace of the vaccine launch in the region and the superior performance of the US economy compared to the other G-10 countries have been contributing to the renewed sales posture around to the common currency. However, the firm hand of the ECB (despite some verbal concerns) in combination with the expected rebound in economic activity in the region in the post-pandemic stage will likely prevent a much deeper pullback in the long-term pair.

Eminent Background Issues: Asymmetric economic recovery in the region. Sustainability of the rebound in inflation figures. Progress of the vaccine launch. Likely political turmoil around the EU Recovery Fund.

EUR / USD levels to watch out for

At the time of writing, the EUR / USD pair is down 0.16% on the day, trading at 1.1756. A breakout of 1.1704 (March 31 low) would target 1.1602 (November 4 low) en route to 1.1572 (2008-2021 support line). On the other hand, the next ascending barrier is at 1.1869 (200-day SMA), followed by 1.1989 (March 11 high) and finally 1.2000 (psychological level).

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