EUR/USD Forecast: Stage seems set for further weakness, possibly towards YTD lows

The US dollar remained in demand on the last trading day of the week and pushed the EUR/USD pair to 1-1/2 week lows. The coronavirus pandemic and its impact on global growth remained a dominant theme in the markets, which continued benefitting the greenback's perceived safe-haven status against its European counterpart. The shared currency was further weighed down by the fact that the final Eurozone Services PMIs for March were revised down.

The USD maintained its bid tone despite awful US monthly jobs report, which showed that the economy lost 701K jobs in March and the unemployment rate jumped to 4.4% from 3.4%. The headline NFP missed consensus estimates by a big margin and further illustrated the extent of the economic fallout from the coronavirus pandemic. Separately, the US ISM Non-Manufacturing PMI surprised positively and came in at 52.5 as against market expectations for a drop to 44.

The pair prolonged its downfall for the fifth straight session and recorded a weekly loss of over 300 pips, eroding a major part of last week's strong recovery gains. The pair now seems to have entered a bearish consolidation phase and was seen oscillating in a narrow trading band, just above the 1.0800 round-figure mark through the Asian session on Monday. Moving ahead, market participants now look forward to the release of German factory orders data and the EU Sentix Investor Confidence Index for some impetus.

There isn't any major market-moving economic data due for release from the US and hence, development surrounding the coronavirus saga might continue to influence the USD price dynamics, which might further contribute towards producing some meaningful trading opportunities on the first day of a new week.

Short-term technical outlook

From a technical perspective, the pair on Friday fell below the 61.8% Fibonacci level of the recent corrective bounce and hence, now seems vulnerable to extend the downward trajectory. Sustained weakness below the 1.0785-75 region will reinforce the negative outlook and set the stage for a slide back towards the 1.0700 round-figure mark en-route yearly lows, around the 1.0635 region.

On the flip side, any attempted recovery now seems to confront some fresh supply near the 1.0890-1.0900 region (50% Fibo.), above which a bout of short-covering has the potential to lift the pair further towards 38.2% Fibo., around mid-1.0900s. The momentum could further get extended towards the key 1.10 psychological mark before the pair eventually aims to test an important confluence resistance near the 1.1040 region, comprising of 100-day SMA and 23.6% Fibo. level.