Could euro bulls push EUR/USD higher?
Hi, dear traders!
Last Friday, the US Labor Department released its labor market data for March. Unemployment in the US continues to fall amid removal of COVID-19 restrictions and return to normalcy - it has decreased to 3.6%, reaching the lowest level since 2020. Economists expected unemployment to decrease to 3.7%. This will give support to the Federal Reserve's monetary tightening course. Non-farm payrolls only expanded by 426,000, well below a projected increase of 492,000. However, this data is very unlikely to force the Fed to adjust its policy. The divergence between projected and actual data is not particularly large, and it could be caused by objective reasons.
Average hourly earnings have increased by 0.4%, matching forecasts. Several heads of major central banks around the world have stated rising wages are boosting already high inflation. However, the earnings increase by 0.4% is unlikely to be a surprising development for the Federal Reserve. Overall, Friday's data releases were positively neutral, and non-farm payrolls not meeting market expectations doesn't change the fact that the US labor market is strong. The Federal Reserve is likely to continue its monetary tightening. According to outlooks by several major commercial banks and hedge funds, the FOMC is planning to hike the rate by 50 basis points in May and June, followed by a 25 basis point reduction. This week, the FOMC will release minutes from its March meeting, which would the most important event of the trading week.
Weekly
According to the weekly chart, EUR/USD left a sizeable upper shadow last week, indicating that bullish traders could not push the pair higher. EUR/USD failed to settle at its weekly high of 1.1185 and finished last week's trading at 1.1047.
Euro bulls could push the pair higher after these losses only if EUR/USD closes above the red Tenkan-Sen line at 1.1150. The 23.6% retracement level of the 1.2266-1.0806 downward movement is also located in the area. Bulls would have to break through strong resistance at 1.1185 to ensure the uptrend would continue. Steering the pair below the key psychological level of 1.1000 and testing the low at 1.0945 are the main goals of bearish traders this week.
Daily
Friday's candlestick shows that trader activity has been quite weak after the release of mixed US labor market data. However, USD has advanced slightly against EUR on the last trading day of the week. Traders did not regard weaker than expected non-farm payrolls as a disaster, but they still did not open long positions actively. Furthermore, EUR/USD found support in the blue Kijun-Sen line of the Ichimoku cloud, which stopped its decline.
The pair could still fall towards the broken level of 1.1000, as well as the pink resistance level at 1.1495-1.1138. If bullish traders fail to reverse the pair upwards, and the pair settles below the pink resistance level, it would possibly lead to a downtrend, allowing traders to open short positions in the medium term. The pair's resistance levels are at 1.1075, 1.1100, and 1.1138. The support levels are located at 1.1028, 1.1000, and 1.0945.
Good luck!