- EUR/USD retreats from daily highs around 1.1560’s amid US dollar weakness.
- EUR/USD: Failure to hold 1.1500 could send the pair tumbling towards 1.1348.
- The market sentiment is downbeat, as investors believe a Fed’s bond taper announcement is imminent.
The EUR/USD rises above Thursday’s daily highs is trading at 1.1572, gaining 0.17% during the New York session at the time of writing. Earlier in the American session, it reached a daily high at 1.1586, but as most G8 currencies, retreated the move. Despite an awful US employment report, the market seems aware that nothing will stop the Federal Reserve from kicking in the bond tapering process in the FOMC November meeting.
Furthermore, the market sentiment is downbeat with US equity markets falling, US T-bond yields rising, and the US dollar clings to 94.00, losing 0.11% against a basket of six peers, capping the EUR/USD move towards 1.1600.
On the macroeconomic front, the Bureau of Labor Statistics (BLS) released the Nonfarm Payrolls report for September, which showed an increase of 194K jobs added to the economy, short than the foreseen 500K by economists threatening to delay a bond taper decision. However, once the knee-jerk reaction faded, the EUR/USD price action reinforced the market belief that a Fed’s QE reduction announcement could be made by November.
EUR/USD Price Forecast: Technical outlook
Daily chart
The EUR/USD is trading well below the daily moving averages (DMA’s), suggesting that the downtrend is intact. Failure to reclaim the 1.1600 level keeps the EUR/USD downward pressured. Also, momentum indicators like the Relative Strength Index (RSI) at 34, well below the 50-midline, aiming lower, hold the door open for further losses.
As the EUR/USD heads south, the first support level would be the 2021 low at 1.1528, followed by the psychological 1.1500. A break below the latter could push the price towards June 10, 2020, high at 1.1422, followed by June 23, 2020, high at 1.1348.
KEY ADDITIONAL LEVELS TO WATCH