EUR/USD Forecast: Bulls losing the battle before it started

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EUR/USD Current price: 1.0777

  • The US ADP survey showed a stronger-than-anticipated job creation in the private sector in March.
  • The Eurozone Harmonized Index of Consumer Prices rose 2.4% YoY in March, easing from 2.6%.
  • EUR/USD advances for a second consecutive day, although additional gains seem unlikely.

The EUR/USD pair advanced during European trading hours but held below the 1.0800 threshold, as investors maintained a cautious stance ahead of United States (US) employment-related data. Stock markets lead the sentiment, with indexes falling after Wall Street’s dismal close on Tuesday. Market players are seeing rate cuts becoming less and less likely as time goes by, given that inflation remains above target while the economy performs pretty well.

Earlier in the day, the Eurozone published the preliminary estimate of the March Harmonized Index of Consumer Prices (HICP), which rose 2.4% YoY, slowing from 2.6%  in February, according to Eurostat. The core HICP annual reading printed 2.9%, easing from 3.1% in the previous month and below the market expectation of 3.0%.

The US published the ADP survey on private job creation, one of the multiple reports the country will release ahead of Nonfarm Payrolls (NFP) on Friday. According to it, the country added 184K new positions in March, surpassing expectations of 148K. Furthermore, February’s reading was upwardly revised from 140K to 155K. The news somehow confirmed the labor market remains tight and gives the Federal Reserve (Fed) additional time to loosen the monetary policy.

EUR/USD short-term technical outlook

From a technical point of view, the EUR/USD pair is up for a second consecutive day, but a sustained rally seems yet out of the picture. In the daily chart, EUR/USD develops below all its moving averages. The 100 and 200 Simple Moving Averages (SMAs) trade directionless, although the 20 SMA gains downward traction between them, suggesting increased selling interest. At the same time, technical indicators remain at negative levels. The Momentum indicator aims higher, while the Relative Strength Index (RSI) indicator turns flat at around 41, reflecting limited buying interest.

For the near term, the 4-hour chart shows EUR/USD battling to extend gains beyond a directionless 20 SMA, which is at around 1.0770. At the same time, the 100 SMA gains bearish traction and is about to cross below a flat 200 SMA, both at around 1.0840. Finally, technical indicators consolidate within neutral levels, falling short of providing directional clues.

Support levels: 1.0725 1.0690 1.0645

Resistance levels: 1.0770 1.0805 1.0840