EUR/USD analysis: risk sentiment toss and turns to keep leading the way
|EUR/USD Current price: 1.2280
- US Nonfarm Payroll came in below market's expectations.
- Escalating tensions between the US and China about a trade war continue to be the main market motor.
The EUR/USD pair gained ground on Friday, although it was not enough to prevent it to close in the red for a second consecutive week. The pair traded as low as 1.2215 at the beginning of the day and ahead of the US Nonfarm Payroll report, which later resulted disappointed: the US economy added just 103,000 new jobs, against the 193K expected, the unemployment rate remained unchanged at 4.1%, while wages' growth was in-line with market's forecast. At the same time that employment data was out, US President Trump threatened to impose tariffs of $100B on another batch of Chinese imports, triggering risk aversion and denting demand for the high-yielding euro, despite a weakening dollar. This upcoming week will have a busy macroeconomic calendar, although there won't be any first-tier report that can overshadow risk-related trading.
Early Sunday, US President Trump twitted that he and Chinese President Xi Ping are "friends," adding that " Taxes will become Reciprocal & a deal will be made on Intellectual Property,(sic)" which may ease fears at the beginning of the week and trigger demand for high-yielding assets, although the back and forth from these last couple of weeks have been dizziness, and uncertainty will prevail.
As for the technical outlook, the EUR/USD pair daily chart shows that it found support around a bullish 100 DMA, the first time testing it this year, but also that it settled below the 20 DMA, which barely turned lower. Technical indicators in the mentioned chart remain within negative territory, although with no clear directional strength, anyway leaning the scale toward the downside. Shorter term, and according to the 4 hours chart, the pair presents a neutral stance, as it settled above a now flat 20 SMA, while technical indicators are stuck around their mid-lines. Steady gains beyond 1.2300 could favor an extension up to 1.2370, while below 1.2250, the pair will likely extend its slide below the 1.2210 region.
Support levels: 1.2250 1.2210 1.2165
Resistance levels: 1.2295 1.2335 1.2370
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