The shared currency weakened against the greenback for a third consecutive day on Friday after the employment report showed the U.S. economy added 223k jobs in April, surging the payrolls figure well above the 200,000 mark, while the unemployment rate fell to a seven-year low of 5.4%. Labor force participation also increased to 62.8% from 62.7%. Investors cheered the renewed strength in the U.S. economy, pushing EUR/USD lower by about 0.50%.
Meanwhile, traders now shift their attention towards the Eurogroup meeting on Monday and EcoFin meeting on Tuesday, with Europe’s finance ministers to discuss Greece’s debts.
Technically, the euro is looking pretty weak against the dollar, having broken through the key support level of 1.1290. Also supporting the bearish view this morning is the MACD, which has now crossed in negative territory while the Relative Strength Index is also showing a weakness in the pair as its falling, currently trading below the 50 level. On the 4-hour chart the ascending trend line as well as the 200-period SMA, both are continuing to provide a significant support to the price action. The psychological level of 1.1000 and 1.1040 are also proving strong support for the pair.
For the time being, I would expect the pair to come under pressure and to retest the key support level of 1.1040. A dip below the aforementioned level, could add further pressure on the psychological level of 1.1000 and thus, would open the way towards the key support level of 1.0920, which coincides with the ascending trend line that started back in mid-April.
Alternatively, a failure to break below the psychological level of 1.1000, I would expect the EUR/USD pair to challenge the 1.1290 – 1.1300 zone, which includes the 50-period SMA and a clear break above that level would drive it towards the recent highs of 1.1390.
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