EUR/USD Could Correct Lower, Key Supports Nearby

Key Highlights

  • EUR/USD gained bullish momentum above 1.2000 and 1.2100.
  • A high is formed near 1.2177 and the pair is showing signs of a downside correction.
  • GBP/USD climbed above 1.3500 and traded close to 1.3540.
  • Gold price is facing a strong resistance near $1,850, while crude oil price is trading in a strong uptrend.

 

EUR/USD Technical Analysis

This past week, the Euro started a strong upward move above the 1.2000 resistance against the US Dollar. EUR/USD even surpassed the 1.2100 resistance zone before facing hurdle near 1.2180.

Looking at the 4-hours chart, the pair traded as high as 1.2177, and it settled well above the 200 simple moving average (green, 4-hours) and the 100 simple moving average (red, 4-hours).

The pair is currently signaling a short-term downside correction below 1.2150. There was already a test of the 50% Fib retracement level of the upward move from the 1.2039 low to 1.2177 high.

 An immediate support is near the 1.2100 zone. The next major support is near the 1.2075 level or the 76.4% Fib retracement level of the upward move from the 1.2039 low to 1.2177 high. Any more losses could lead the pair towards the 1.2020 support.

Conversely, the pair could climb higher above the 1.2175 and 1.2200 resistance levels. The next major resistance sits near the 1.2250 level.

Fundamentally, the US nonfarm payrolls report for Nov 2020 was released this past Friday by the US Bureau of Labor Statistics. The market was looking for an increase of 469K in Nov 2020.

The actual result was lower than the market forecast, as the US nonfarm payrolls increased only 245K, down from the last revised reading of 610K. Conversely, the US unemployment rate declined from 6.9% to 6.7%.

The report added:

In November, the unemployment rate edged down to 6.7 percent. The rate is down by 8.0 percentage points from its recent high in April but is 3.2 percentage points higher than it was in February.

Overall, EUR/USD could correct lower, but there are many key supports near 1.2050 and 1.2020. Similarly, dips might remain supported in GBP/USD towards the 1.3380 and 1.3350 levels.

Upcoming Economic Releases

  • Germany’s Industrial Production for Oct 2020 (MoM) - Forecast +1.5%, versus +1.6% previous.
  • Euro Zone Sentix Investor Confidence for June 2020 - Forecast -15.0, versus 27.4 previous.