EUR/USD Forecast: Risk-on to keep it under pressure
|EUR/USD Current Price: 1.1121
- US December employment data missed the market’s expectations, but it was no shocker.
- The US and China will sign phase one of the trade deal this week.
- EUR/USD technically neutral, upside potential limited with sellers waiting to add.
The EUR/USD pair finished a second consecutive week in the red, although it trimmed part of its losses on Friday, as a worse than expected US employment report put a halt to the dollar’s rally and triggered some profit-taking ahead of the close. According to the official report, the US added 145K new jobs in December, below the 164K expected, while the unemployment rate remained steady at 3.5% meeting the market’s forecast. Wages were also below the market’s forecast, increasing by just 2.9% YoY against the previous 3.1%, while when compared to the previous month, they were up by only 0.1%.
Anyway, the overall positive stance prevails amid cooling fears about Middle-East tensions, although speculative interest is highly susceptible to risk-related headlines. Nor the EU, neither the US, will publish relevant data this Monday. The US and China are scheduled to sign phase one of the trade deal this week. Over the weekend, news indicated that both economies agreed to hold semi-annual talks with an aim to implement reforms and resolve any disputes, which should add to the risk-on mood.
EUR/USD short-term technical outlook
The EUR/USD pair has bounced from a weekly low of 1.1084 to settle at around 1.1120, still below 1.1132, the 61.8% retracement of its late December rally. The daily chart shows that the pair is below its 20 and 200 DMA, both converging a handful of pips above the mentioned Fibonacci resistance, while the 100 DMA lacks directional strength at around 1.1065, a strong static support level. Technical indicators in the meantime, head nowhere around their midlines, offering a neutral stance.
In the shorter-term, and according to the 4-hour chart, the upside potential seems limited, as the pair is struggling around a bearish 20 SMA, while technical indicators remain within negative levels, the Momentum advancing but the RSI having lost upward strength, currently at around 46. Further recoveries are possible, although selling interest will likely re-appear on an approach to the 1.1200 level.
Support levels: 1.1090 1.1065 1.1020
Resistance levels: 1.1135 1.1160 1.1200
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