- EUR/USD has been struggling as France enters a lockdown and covid rages through all of Europe.
- US data and reactions to Biden's infrastructure plan may boost the dollar.
- Thursday's four-hour chart is pointing to further falls for the currency pair.
Euro bears are not taken for a ride on April Fool's Day – the common currency remains under pressure and for worrying reasons. Coronavirus cases continue rising in the old continent and the threat of overwhelming France's health system caused President Emmanuel Macron to impose a monthlong lockdown. His move joins Italy, Germany and other countries.
The old continent is bracing for further pain from the virus, especially as lags behind in vaccinations. While the pace of immunization is set to accelerate, only around 12% of the population received one jab and a manufacturing issue at Johnson & Johnson's US factory may cause even more delays.
EUR/USD has been holding up above 1.17 as US yields retreat from their highs. One of the reasons for the calm is that US President Joe Biden presented his massive $2.25 trillion infrastructure spending plan along with a funding scheme – tax hikes are coming. While higher rates for corporates may weigh on Wall Street, it means less debt issuance, which is positive for bonds. The resulting drop in yields weighs on the greenback.
Two critical data points are eyed on Thursday, and they may push the dollar higher. First, weekly jobless claims are set to continue falling, after hitting 684,000 last week – the lowest since the pandemic.
US Initial Jobless Claims Preview: Market lose interest in layoffs
Secondly, the ISM Manufacturing Purchasing Managers' Index for March is set to extend its gains above 60 – reflecting the rapid growth in America's industrial sector. Any score above 50 represents expansion.
ISM Manufacturing Purchasing Managers’ Index March Preview: Consumer confidence reinforcement
Both figures serve as a hint toward March's Nonfarm Payrolls report due out on Good Friday. Economists project a substantial boost to employment, reflecting an acceleration. The mix of upbeat data and low liquidity could be explosive for the dollar.
Final Manufacturing PMIs in Europe were also upbeat, but they are heavily overshadowed by the shuttering in the old continent.
See Nonfarm Payrolls Preview: Five reasons why hiring is set to skyrocket, dollar may follow
All in all, after EUR/USD stabilized at lower ground, it may be ready to resume its falls.
EUR/USD Technical Analysis
Euro/dollar continues suffering from downside momentum on the four-hour chart and remains suppressed below the 50, 100 and 200 Simple Moving Averages. Moreove, the Relative Strength Index has risen above 30 – leaving oversold territory and allowing for more falls.
The round 1.17 level provided support earlier this week and remains critical support. It is followed by 1.1630, 1.16 and 1.1550, all dating back to the autumn of last year.
Some resistance awaits at 1.1745, the daily high, with the more substantial cap looming at 1.1760. The next levels to watch are 1.1805 and 1.1836.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD flirts with daily tops near 1.0730
The continuation of the selling pressure in the Greenback now lends further oxygen to the risk complex, encouraging EUR/USD to revisit the area of daily highs near 1.0730.
USD/JPY looks stable around 156.50 as suspicious intervention lingers
USD/JPY remains well on the defensive in the mid-156.00s albeit off daily lows, as market participants continue to digest the still-unconfirmed FX intervention by the Japanese MoF earlier in the Asian session.
Gold advances for a third consecutive day
Gold fluctuates in a relatively tight channel above $2,330 on Monday. The benchmark 10-year US Treasury bond yield corrects lower and helps XAU/USD limit its losses ahead of this week's key Fed policy meeting.
Week Ahead: Bitcoin could surprise investors this week Premium
Two main macroeconomic events this week could attempt to sway the crypto markets. Bitcoin (BTC), which showed strength last week, has slipped into a short-term consolidation.
Five Fundamentals for the week: Fed fears, Nonfarm Payrolls, Middle East promise an explosive week Premium
Higher inflation is set to push Fed Chair Powell and his colleagues to a hawkish decision. Nonfarm Payrolls are set to rock markets, but the ISM Services PMI released immediately afterward could steal the show.