EUR/USD struggles to extend gains as volume thins out

Eren Sengezer FXStreet

The EUR/USD pair is holding on to its daily gains but is having a difficult time advance higher as the trading volume thins out towards the end of the week. As of writing, the pair is trading at 1.1278, gaining 0.57% on the day.

At the beginning of the NA session, the nonfarm payroll report came in below the market consensus and triggered a USD sell-off. After making a mild recovery and closing the day above the 97 handle on Thursday, the US Dollar Index came under a renewed selling pressure on Friday and slipped to its lowest level since Trump's election victory, fueling the upsurge in the EUR/USD pair. As of writing, the index is at 96.67, down 0.5% on the day.

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Commenting on today's unemployment report, Dallas Fed's President Robert Kaplan said that there was still some slack in the labor market but the economy was continuing to move towards the full employment. Regardless of his comments, the greenback failed to make a recovery.

Technical outlook

In case the pair is able to finish the day above the 1.1265 mark, it will record its highest weekly close since mid-August and will be poised for further gains in near-term. However, after recording gains in six of last eight weeks, the RSI for the pair on the weekly graph is starting to suggest overbought conditions. Hence, a technical correction may be on its way before the pair continues its bullish move. 1.13 (psychological level/Nov. 9 spike) could be seen as the first target ahead of 1.1365 (Aug. 18 high) and 1.1400 psychological level. On the downside, supports align at 1.1135 (20-DMA), 1.1100 (Fib. 23.6% retracement of Apr. 10 - May 23 rise) and 1.10 (psychological level/ Fib. 38.2%).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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