EUR/USD Forecast: Dollar set to keep advancing

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0808

US employment data much worse than anticipated, yet the American currency kept rallying.
The coronavirus pandemic remains in center stage and gives no signs of easing.
EUR/USD technically bearish, poised to test its yearly low at 1.0635.

The greenback finished the week stronger against all of its major rivals, despite horrid March employment data. The Nonfarm Payroll report showed the country lost in the month 701K jobs, while the unemployment claim jumped from 3.4% to 4.4%, and the Labor Force Participation Rate declined to 62.7%. Wages were better than anticipated, up by 0.4% MoM and by 3.1% YoY. The EUR/USD pair fell to 1.0772, settling just above the 1.0800 threshold, as the dollar gathered additional momentum following the release of the official ISM Non-Manufacturing PMI, which resulted at 52.5 against the 44 expected.

The US Federal Reserve announced on Friday it would dial back the daily pace of bond-buying to $50 billion a day starting this week, down from the initial buying of $75 billion, a positive sign toward some financial stability. Still, the coronavirus pandemic continues to lead the way. The crisis extends as the virus takes its global toll, with over 1.2M reported cases and more than 65,000 reported deaths.

This Monday, the EU will release the April Sentix Investor Confidence Index foreseen at -11.1 vs the previous -17.1. Germany will publish February Factory Orders, while the US macroeconomic calendar has nothing relevant to offer.

EUR/USD short-term technical outlook

The EUR/USD pair is at risk of extending its decline, as it has broken below the 61.8% retracement of its latest daily advance at 1.0830. In the daily chart, the pair is developing far below all of its moving averages, with the 20 DMA accelerating south below the larger ones. Technical indicators have resumed their declines after correcting oversold conditions. In the 4-hour chart, the pair is also developing below moving averages, with the 20 and 100 SMA gaining bearish strength. Technical indicators in this last time-frame have bounced from daily lows but remain within negative levels.

Support levels: 1.0770 1.0725 1.0680

Resistance levels: 1.0830 1.0890 1.0940

View Live Chart for the EUR/USD

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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