The American dollar is ending the week lower across the board, although the EUR is the worst performer against the greenback, hardly 100 pips up from its weekly opening, and having set a lower low of 1.0824.
There's a lot going on in markets, and one of those things is continued signs of economic slowdown all across the world. Despite commodity prices have stabilized and oil trades steadily above $35.00, concerns over the economic future of the world's biggest economies have led to some choppy trading at the beginning of the week.
The dollar began suffering on Thursday, as tepid employment sub-component in the ISN non manufacturing index and an increase in weekly jobless claims suggested the US job sector could have tumbled again in February. Before that, the common currency has been under pressure on speculation the ECB was planning to cut its deposit rate by 15bp in their next week meeting, but early Friday, news hit the wires that policy makers have reached no policy consensus beyond a deposit rate cut of 10bp, which sent the EUR/USD higher ahead of the US Nonfarm Payroll report.
Finally out, the US most relevant economic report showed that the US created 242K new jobs in February, much better-than the 190K expected, but wages dropped by 0.1% from the prior month, the first decline since December 2014. Also, the US trade deficit widened in January to $45.68B dollars.
View the Live chart of the EUR/USD
As said many times, the main concern these days is wages, not job's creation. We all know the job sector is ok. The problem is inflation, and decreasing wages are surely against the case of rising inflation. Despite the strong headline, the whole report just delayed even further the next FED's rate hike, and that's why the greenback is plummeting.
From a technical point of view, the weekly daily chart shows that the price recovered up to the 38.2% retracement of the latest bearish run between 1.1375 and the mentioned 1.0824 at 1.1035, this last, a handful of pips above the 200 DMA. The pair is struggling to overcome this price zone, quite a tough resistance ahead of the weekend. In the same chart, the technical indicators have bounced from near oversold levels, and head north within bearish territory, limiting the downside and favoring some additional advances for early next week.
The 20 SMA in the mentioned time frame stands at 1.1060, and a weekly close above it should signal a continued advance next week, with 1.1120/60 as the primary target region, en route to 1.1250. If the pair however fails to close the week above 1.1000, the risk turns towards the 1.0800/40 region, but this last will only be reached if the ECB surprises the markets announcing more than just a mere 10bp rate cut in its deposit rate.
Latest updates on the EUR/USD Forecast
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