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Aayush Jindal

Key Highlights

  • EUR/USD failed to stay above the key 1.0980 support area and declined steadily.
  • A key bearish trend line is forming with resistance near 1.0890 on the 4-hours chart.
  • The US nonfarm payrolls declined 701K and the unemployment rate rose to 4.4% in March 2020.
  • The Euro Zone Sentix Investor Confidence could increase from -17.1 to -11.1 in April 2020.

EUR/USD Technical Analysis

After a steady rise above 1.1000, the Euro faced a strong resistance near 1.1150 against the US Dollar. As a result, EUR/USD started a fresh decline and traded below the key 1.0980 support.

Looking at the 4-hours chart, the pair traded as high as 1.1147 before starting a downward move. There was a break below many major supports near 1.1000 and the pair settled below the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).

Besides, there was a break below the 50% Fib retracement level of the main upward move from the 1.0635 low to 1.1147 high.

It opened the doors for more losses below the 1.0850 support. An initial support on the downside is near the 1.0750 level or the 76.4% Fib retracement level of the main upward move from the 1.0635 low to 1.1147 high.

If EUR/USD fails to stay above the 1.0750 support, there is a risk of more losses. The next major support is near the 1.0680 level, followed by the 1.0635 swing low.

On the upside, there is a strong resistance forming near 1.0900 and a connecting bearish trend line on the same chart. The main resistance is now near 1.0980 and the 100 SMA, above which the pair might turn bullish.

Fundamentally, the US nonfarm payrolls report for March 2020 was released by the US Bureau of Labor Statistics. The market was looking for a decline of 100K in the total nonfarm payroll employment.

The actual result was very disappointing as the US nonfarm payrolls fell significantly by 701K. Besides, the unemployment rate climbed higher from 3.5% to 4.4%.

The report added:

The changes in these measures reflect the effects of the coronavirus (COVID-19) and efforts to contain it. Employment in leisure and hospitality fell by 459,000, mainly in food services and drinking places.

Overall, EUR/USD might correct higher, but it is likely to struggle near 1.0900 or 1.0950. Similarly, GBP/USD is struggling to clear the 1.2500 resistance and it could decline below 1.2200.

Upcoming Economic Releases

  • German Factory Orders for Feb 2020 (YoY) – Forecast -1.9%, versus +5.5% previous.
  • Euro Zone Sentix Investor Confidence for April 2020 - Forecast -11.1, versus -17.1 previous.