EUR/USD Forecast: Under pressure despite alarming US employment figures

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1314

EU inflation was confirmed at 5% YoY in December as previously estimated.
US weekly unemployment claims surged early in January amid Omicron woes.
EUR/USD is technically bearish but holds above a Fibonacci support level at 1.1305.

The EUR/USD pair is down on Thursday, as the shared currency was unable to take advantage of tepid US data. The greenback eased ahead of Wall Street's opening, maintaining the sour tone through the American session against most major rivals, following a negative surprise from US employment data. Initial Jobless Claims for the week ended January 7, which unexpectedly jumped to 286K, much worse than the 220K expected, as the country struggles to overcome the coronavirus Omicron wave.

The greenback also suffered from subdued government bond yields, which spent the day consolidating at the lower end of their weekly range, and the better performance of equities, as European indexes closed in the green, providing support to Wall Street which also stays up heading into the close.

The US also published the Philadelphia Fed Manufacturing Survey, which surged from 15.4 to 23.2 in January, beating expectations. As for the EU, the December Consumer Price Index was confirmed at 5% YoY, while the core reading met the preliminary estimate posting 2.6%. Also, the European Central Bank posted the Accounts of its latest meeting, which showed that policymakers are aware of a possible "higher for longer" inflation scenario.

European Central Bank President Christine Lagarde is due to participate in a virtual panel discussion titled "Global Economic Outlook" at the World Economic Forum on Friday. The EU will release the preliminary estimate of January Consumer Confidence, previously at -8.3, while the US will not release relevant macroeconomic figures.

EUR/USD short-term technical outlook

The daily chart for the EUR/USD pair hints at an increased bearish potential. A flat 20 SMA capped advances for a second consecutive day, while the longer moving averages maintained their bearish slopes well above the current level. At the same time, technical indicators gain bearish momentum within negative levels.

Worth noting that the pair keeps trading between Fibonacci levels, which needs to break to confirm a directional move. Immediate support is at 1.1305, the 23.6% retracement of the 1.1691/1.1185 slide. The 38.2% retracement is located at 1.1385, providing strong resistance since mid-November.

The 4-hour chart shows that the pair is poised to extend its decline. Technical indicators grind lower within negative levels, as a bearish 20 SMA provides intraday resistance and is poised to cross below the 100 SMA.

Support levels: 1.1305 1.1260 1.1220

Resistance levels: 1.1385 1.1440 1.1485

View Live Chart for the EUR/USD

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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.

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