the main points
- EUR/USD failed to stay above the key 1.0980 support area and fell steadily.
- A major descending trend line with resistance is forming near 1.0890 on the 4 hours chart.
- Non-farm payrolls in the US fell by 701 thousand and the unemployment rate rose to 4.4% in March 2020.
- Eurozone investor confidence Sentix may rise from -17.1 to -11.1 in April 2020.
Technical analysis of the EUR/USD pair
After a steady rise above 1.1000, the euro encountered strong resistance near 1.1150 against the US dollar. As a result, the EUR/USD pair started a new decline and traded below the key 1.0980 support level.
Looking at the 4 hours chart, the pair traded as high as 1.1147 before starting a downward movement. There was a break below several key support levels near 1.1000 and the pair settled below the 100 SMA (red, 4 hours) and the 200 SMA (green, 4 hours).
Besides, there was a breakout below the 50% Fib retracement level of the major upward move from the 1.0635 low to the 1.1147 high.
Opening the door for more losses below the 1.0850 support level. Initial support to the downside is near the 1.0750 level or the 76.4% Fibonacci retracement of the major upward move from the 1.0635 low to 1.1147 low.
If the EUR/USD pair fails to stay above the 1.0750 support level, there is a risk of further losses. The next major support is near the 1.0680 level, followed by the swing low at 1.0635.
On the upside, there is strong resistance forming near 1.0900 and a connecting descending trend line on the same chart. The main resistance is now near 1.0980 and the 100 SMA, after which the pair may turn bullish.
Basically, the March 2020 US Non-Farm Payrolls report was released by the US Bureau of Labor Statistics. The market was looking for a drop of 100,000 in total non-farm payrolls.
The actual result was very disappointing as the US non-farm payrolls decreased significantly by 701K. Besides, the unemployment rate increased from 3.5% to 4.4%.
The report added:
Changes in these measures reflect the effects of the coronavirus (COVID-19) and efforts to contain it. Employment in leisure and hospitality decreased by 459,000, mainly in food services and drinking places.
In general, the EUR/USD pair may correct higher, but is likely to struggle around 1.0900 or 1.0950. Similarly, GBP/USD is struggling to remove the 1.2500 resistance and could drop below 1.2200.
Upcoming economic releases
German Factory Orders for February 2020 (YoY) - Forecast -1.9%, vs. +5.5% previous.
Eurozone Sentix Investor Confidence for April 2020 - Forecast -11.1, vs. -17.1 prior.