EUR/USD Forecast: At risk of falling further and piercing February’s low

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.2030

Retail Sales in the euro area were sharply down in January.
US employment-related data came in better-than-expected, helping the greenback.
EUR/USD pressures daily lows and is poised to extend its decline towards 1.1950.

Market players continue to buy the greenback, sending EUR/USD down to 1.2026 so far this Thursday. Resurgent government bond yields are behind the latest greenback’s advance, although yields retreated modestly ahead of the US Federal Reserve chief Jerome Powell’s speech. Investors are waiting to hear Powell’s opinion on yields and whether the latest rally may affect the current monetary policy.

The EU published January Retail Sales which were down by 5.9% monthly basis, much worse than anticipated, while the annual reading printed at -6.4% also missing the market’s forecast, adding pressure on the shared currency. As for the US, the country has just published Initial Jobless Claims for February 26, which came in better than anticipated at 745K. February Challenger Job Cuts decreased sharply to 34.531K. In the last quarter of 2020, Unit Labor Cost stood at 6%, below the previous 6.8%, while Nonfarm Productivity came in at -4.2%, better than the -4.7% expected.

EUR/USD short-term technical outlook

The EUR/USD pair trades in the 1.2030 price zone and is at risk of falling further. In the 4-hour chart, the 20 SMA heads lower above the current level and below the larger ones. The moving average is also below the 38.2% retracement of the November/January rally at 1.2060. Technical indicators lack directional strength, with the Momentum stuck around its 100 level and the RSI around 40. The decline will likely accelerate on a break below 1.2000, towards this month’s low at 1.1951.

Support levels: 1.2000 1.1950 1.1910

Resistance levels: 1.2065 1.2100 1.2145

View Live Chart for the EUR/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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