- EUR/USD has staged a rebound after having dropped to a multi-week low on Thursday.
- The US Dollar could have a hard time gathering strength in case risk flows return.
- The pair is likely to face stiff resistance in 1.0950/60 area.
EUR/USD has staged a technical correction early Friday after having touched its weakest level in a month at 1.0900 on Thursday. The modest improvement in market mood in the European morning helps the pair limit its losses and risk perception could continue to drive the action ahead of the weekend.
Resurfacing fears over a deepening banking crisis in the United States caused investors to stay away from risk-sensitive assets on Thursday. Consequently, the US Dollar (USD) outperformed its rivals despite the disappointing weekly Initial Jobless Claims and lower-than-expected April Producer Price Index (PPI) data.
Early Friday, US stock index futures trade in positive territory and the Euro Stoxx 50 is up nearly 0.5%. A risk rally in Wall Street could put additional weight on the USD ahead of the weekend and allow EUR/USD to extend its rebound.
Meanwhile, market participants will keep a close eye on comments from European Central Bank (ECB) officials. After ECB policymaker Joachim Nagel pushed back against market chatter that the ECB was likely to hike its key rates two more times in July and September, the Euro struggled to find demand.
The US economic docket will feature the University of Michigan's Consumer Sentiment Index for May on Friday. In case the report shows that banking woes had a significant negative impact on consumer confidence, safe-haven flows could return to markets and force EUR/USD to stay on the back foot heading into the weekend.
EUR/USD Technical Analysis
EUR/USD stays dangerously close to 1.0900 (static level, psychological level, Thursday low). The Relative Strength Index (RSI) indicator on the four-hour chart, however, aligns near 30, suggesting that the pair could stage a correction before the next leg lower.
A four-hour close below 1.0900 should bring in additional sellers and open the door for an extended slide toward 1.0870 (Fibonacci 38.2% retracement of the latest uptrend) and 1.0800 (psychological level, Fibonacci 50% retracement).
On the upside, stiff resistance seems to have formed at 1.0950/1.0960, where the Fibonacci 23.6% retracement level and the 200-period Simple Moving Average (SMA) align. Sellers could move to sidelines if EUR/USD rises below that level and starts using it as support. In that scenario, 1.1000 (100-period SMA, 50-period SMA, psychological level) and 1.1050 (static level) could be seen as next bullish targets.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD breaks below 1.1000 on stellar NFP
The buying bias in the Greenback gathers extra pace on Friday after the US economy created far more jobs than initially estimated in September, dragging EUR/USD to the area of new lows near 1.0950.
GBP/USD breaches 1.3100 after encouraging US Payrolls
The continuation of the uptrend in the US Dollar motivates GBP/USD to accelerates its losses and breaches 1.3100 the figure in the wake of the release of US NFP.
Gold rebounds from daily lows and flirts with $2,670
Following a post-NFP dip to the $2,640 region, Gold prices now embarks on an acceptable rebound and retest the area of $2,670 per ounce troy despite the marked advance in the US Dollar and rising US yields across the board.
US Payrolls surge in September, as 50bp rate cut ruled out
US payrolls data surprised on the upside in September, rising by 254k, smashing expectations of a 150k rise. The unemployment rate fell to 4.1% from 4.2%, average hourly earnings increased to a 4% YoY rate and there was a 72k upwards revision to the previous two months’ payrolls numbers.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.