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EUR/USD hovers around 1.0540s as bears take a breather

  • Risk-aversion lifted the low-yielder EUR, despite broad US dollar strength.
  • The US labor market keeps strengthening, adding 428K jobs to the economy.
  • EUR/USD Price Forecast: In the long-term downward biased, but the 1-hour chart depicts the pair as neutral-upwards.

The EUR/USD trimmed some of Thursday’s losses, and it is set to finish the week on the right foot, snapping four consecutive weeks of losses amidst a risk-aversion environment in the financial markets. At 1.0552, the EUR/USD edges up some 0.13%.

Sentiment remains negative, as reflected by US equities, extending their losses for the second straight day. Earlier in the North American session, the US Department of Labour unveiled April’s Nonfarm Payrolls report, which showed that the US economy added 428K jobs, higher than the 391K foreseen by analysts. Job gains were led by leisure, hospitality, manufacturing, transportation, and warehousing.

The Unemployment Rate remained unchanged at 3.6%, and Average Hourly Earnings rose by 5.5% y/y, lower than the 5.6% last month’s previous reading.

“Nothing in today’s employment report would change the Fed’s expected path … current market sentiment does not place a lot of confidence in the Fed getting inflation under control without a recession,” according to sources cited by Reuters.

Analysts at ING wrote in a note that “the unemployment rate held steady at 3.6% rather than dropping to 3.5% as expected, which in combination with a softer average hourly earnings figure of 0.3% month-on-month rather than the 0.4% consensus forecast (and slower than the 0.5% gain in March) may been taken as a signal of less inflationary pressures in the jobs market.”

Meanwhile, the US Dollar Index, a measurement of the greenback’s value against a six currencies basket, is pairing early day losses, up 0.11%, currently at 103.664, while the US 10-year Treasury yield reached a YTD high around 3.131%.

EUR/USD Price Forecast: Technical Outlook

From a daily chart perspective, the EUR/USD remains downward biased. Despite Friday’s price action, which favored the shared currency, the major remains vulnerable to further selling pressure, albeit ECB’s member efforts to boost the EUR.

The 1-hour chart in the near-term depicts the EUR/USD as neutral-upward biased. The 50-hour simple moving average (HSMA) crossed over the 200-HSMA, a bullish signal, but the almost horizontal slope keeps the EUR/USD range-bound.

Upwards, the EUR/USD’s first resistance would be April 2017 high at around 1.0569. Break above would expose Friday’s daily high, shy of the 1.0600 figure, followed by the R1 daily pivot at 1.0620. On the downside, the EUR/USD’s first support would be the 200-HSMA at 1.0550. A breach of the latter would expose the February 2017 swing low at 1.0494, followed by the S1 daily pivot at 1.0470, and then 1.0450.