EUR/USD Forecast: Risk-on backed a modest comeback
EUR/USD Current Price: 1.2056
- US employment data beat the market’s expectations, hinting at a positive Nonfarm Payrolls report.
- Decreased hopes of higher US rates undermined demand for the American currency.
- EUR/USD has a mildly bullish potential in the near-term, critical support at 1.1980.
The dollar fell as risk-related sentiment improved, with equities rallying and government bond yields falling on cooling hopes for a rate hike in the US. The EUR/USD pair advanced to 1.2071 to stabilize around 1.2050 after several FOMC voting members dismissed chances of a Federal Reserve move. Dallas Federal Reserve Bank President Robert Kaplan said that he would like to start talking about tapering sooner rather than later, but he is not a voting member.
Data wise, positive news came from both shores of the Atlantic. Germany Factory Orders soared 27.8% MoM in March, while EU Retail Sales surged 2.7% in the same month, both beating the market’s expectations. In the US, Challenger Job Cuts decreased to 22.913K in April, while Initial Jobless Claims for the week ended April 30 resulted in 498K, better than the 540K expected. Q1 Nonfarm Productivity increased 5.4%, while Unit Labor Cost in the same period declined by 0.3%.
On Friday, the US will publish the April Nonfarm Payrolls report. The country is expected to have added 978K new jobs in the month, while the unemployment rate is foreseen contracting to 5.8% from 6% previously. Average hourly earnings, however, are expected to have contracted sharply in the month.
EUR/USD short-term technical outlook
The EUR/USD pair is hovering just above the 23.6% retracement of its latest bullish run after meeting buyers around the 38.2% retracement of the same rally. The 4-hour chart shows that the pair is above all of its moving averages, which advance with uneven strength. Technical indicators remain within positive levels, although the Momentum is retreating modestly while the RSI hovers around 56, indicating limited buying interest. The pair could advance on a break above 1.2075, the weekly high, while bears may have better chances on a break below 1.1980.
Support levels: 1.2015 1.1980 1.1930
Resistance levels: 1.2075 1.2110 1.2150
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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.
