EUR/USD Forecast: Soft US employment data to weigh on the greenback
EUR/USD Current Price: 1.2166
- The US added 559,000 jobs in May, missing the market’s expectations.
- The US Federal Reserve monetary policy is the one and only motor.
- EUR/USD has limited bullish potential in the near-term from a technical perspective.
The EUR/USD pair recovered on Friday as the dollar shed ground on the back of a disappointing US employment report. The American currency was firmly up ahead of the release as employment and growth-related data ahead of the event sparked speculation that the Fed will have to tighten its monetary policy. The central bank exacerbated such a sentiment by announcing it would unwind one of the bond-buying programs established to support the economy throughout the pandemic.
The EU published April Retail Sales, which were down by 3.1% MoM, missing the market’s expectations and exacerbating the shared currency’s weakness. The US May Nonfarm Payrolls report showed that the country added 559,000 jobs in May, missing expectations. The unemployment rate fell to 5.8% from 6.1%, better than the expected 5.9%. However, the Labor Force Participation Rate contracted from 61.7% to 61.6%.
On Monday, Germany will publish April Factory Orders, seen up by 1% MoM, while the EU will release June Sentix Investor Confidence, foreseen at 26 from 21 previously. The US will publish the April Consumer Credit Change.
EUR/USD short-term technical outlook
The EUR/USD pair settled below its 20 SMA in the daily chart, currently acting as dynamic resistance around 1.2180. Technical indicators are aiming to bounce from their midlines but lack strength, mostly neutral. In the near-term, and according to the 4-hour chart, the upside seems limited, as technical indicators turned flat below their midlines after correcting oversold readings, while the recovery stalled around a bearish 20 SMA, which is crossing below the 100 SMA. However, the greenback will likely fall on the back of sentiment.
Support levels: 1.2115 1.2070 1.2020
Resistance levels: 1.2185 1.2240 1.2290
Premium
You have reached your limit of 3 free articles for this month.
Start your subscription and get access to all our original articles.
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.
