EUR/USD offered, comes down to test 1.1750

EUR/USD regains downside traction near 1.1750.
US Nonfarm Payrolls surprised to the upside in March.
The US unemployment rate eased to 6.0% last month.

Pablo Piovano FXStreet

The single currency trades on the defensive and motivates EUR/USD to shed some ground and revisit the mid-1.1700s on Good Friday.

EUR/USD fails to re-test 1.1800

EUR/USD so far reverses two consecutive daily advances, although the bullish attempt run out of steam just ahead of the key barrier at 1.1800 the figure, hinting at the idea that the rebound lacks sustainability and therefore exposing the pair to the resumption of the downtrend.

The pair now faces increasing downside pressure amidst the pick-up in the buying interest in the dollar following the stellar prints from US Nonfarm Payrolls.

Indeed, the US economy added 916K jobs during last month, largely surpassing forecasts, while the February’s print was also revised higher. Adding to the upbeat tone, the jobless rate grinded lower to 6.0% (from 6.2%).

A small (disappointing?) uptick in the Participation Rate ends the positive note, while the Average Hourly Earnings came in short of estimates, contracting 0.1% MoM and expanding 4.2% from a year earlier.

Despite the solid print from the Payrolls, they’re still nearly 8.5 million lower than February 2020 figures, while the lower unemployment rate remains highly played down by the decline in the Participation Rate.

What to look for around EUR

EUR/USD met some decent resistance in the vicinity of 1.1800 so far this week. The strong pullback in the pair seen as of late came along the persistent bid bias in the greenback, which has been undermining the constructive view in the pair in the past weeks. The deterioration of the morale in Euroland coupled with the poor pace of the vaccine rollout in the region vs. the solid performance of the US economy have all been collaborating with the renewed offered stance around the single currency. However, the steady hand from the ECB (despite some verbal concerns) in combination with the expected rebound of the economic activity in the region in the post-pandemic stage is likely to prevent a much deeper pullback in the pair in the longer run.

Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the vaccine rollout. Probable political effervescence around the EU Recovery Fund.

EUR/USD levels to watch

At the moment, the index is retreating 0.16% at 1.1756 and a breach of 1.1704 (2021 low Mar.31) would target 1.1602 (monthly low Nov.4) en route to 1.1572 (2008-2021 support line). On the other hand, the next up barrier lines up at 1.1869 (200-day SMA) followed by 1.1989 (weekly high Mar.11) and finally 1.2000 (psychological level).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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