EUR/USD Forecast: Remains vulnerable to test sub-1.0900 levels

• EUR/USD remained heavily offered for the fifth consecutive session on Friday.
• Mixed US jobs data failed to hinder the USD bullish run or lend any support.
• The USD price dynamics might continue to act as an exclusive on Monday.

The EUR/USD pair remained under some heavy selling pressure for the fifth consecutive session on Friday and nosedived to four-month lows amid sustained US dollar strength. Despite lingering concerns about the outbreak of coronavirus, the latest optimism over US-China trade talks assisted the greenback to continue with its recent bullish. In the latest trade-related development, China announced that it would halve tariffs on $75 billion in US goods. The already stronger USD got an additional boost following the release of stronger headline NFP print, which reinforced expectations that the economy is in healthy shape.

EUR/USD weighed down by stronger USD

Data released on Friday showed that the US economy added 225K new jobs in January, much better than consensus estimates and notably higher than 175K monthly growth in 2019. Conversely, the unemployment rate ticked higher to 3.6% from 3.5% previous, albeit was largely offset by the fact that the participation rate increased to 63.4% – the highest level since June 2013. Meanwhile, average hourly earnings missed expectations and showed modest growth of 0.2% on a monthly basis (3.1% YoY rate). The mixed report, however, did little to dampen the prevailing bullish sentiment surrounding the buck and continued exerting pressure on the major.

The pair finally settled near the lower end of its weekly trading range and recorded the worst weekly decline since November 2019. However, extremely oversold conditions helped ease the bearish pressure and helped the pair to stage a modest rebound on the first day of a new trading week. In absence of any major market-moving economic releases, either from the Eurozone or the US, the USD price dynamics – amid worries about the economic impact of the deadly coronavirus – might continue to act as an exclusive driver of the pair's momentum.

Short-term technical outlook

From a technical perspective, the pair already seems to have confirmed a near-term bearish breakdown below key support near the 1.0985-80 horizontal support. The mentioned support breakpoint might now keep a lid on any meaningful attempted recovery. That said, a sustained strength might trigger a near-term short-covering bounce and lift the pair back towards the 1.1045-50 supply zone, with some intermediate resistance near the 1.10 mark and the 1.1025 level.

On the flip side, the pair remains vulnerable to extend the downfall further towards challenging the 1.0900 round-figure mark. Bearish traders might them aim towards challenging over 28-month lows, around the 1.0880 region set in October.