- EUR flat lined despite dismal US wage growth release.
- Dovish Draghi could keep gains under check.
The EUR/USD closed with moderate losses at 1.2303 on Friday and traded in a sideways manner in Asia despite the tepid US wage growth and risk-on action in the equities.
Kathy Lien from BK Asset Management believes Draghi’s dovish talk capped the upside in the Euro. “With his less hawkish speech, Mario Draghi is telling us that while they are more confident in the economy, they don’t plan to taper quickly. As a result, the euro will underperform other major currencies in the coming week”, Lien writes.
Further, the USD bears may find themselves trapped on the wrong side of the market. The data released on Friday showed the nonfarm payrolls jumped by 313,000 jobs last month – the highest print since July 2016. The big additions were largely due to largest rise in construction sector jobs since 2007. So, an argument can be made that the fiscal spending is starting to feed through into the economy and that could force the Fed to respond by raising rates at a faster rate.
As for today, the data calendar is light, hence the spot is at the mercy of the market’s appetite for the US dollars.
EUR/USD Technical Levels
Chief Analyst Valeria Bednarik writes, ” technical readings present a neutral stance, as the pair settled below a horizontal 20 DMA, while technical indicators hover directionless around their mid-lines. Longer term, however, the risk is lean toward the upside, as the 100 and 200 DMAs keep heading north well below the current level, and would take a break of 1.2100 to turn the pair bearish.”
Support levels: 1.2265 1.2220 1.2185
Resistance levels: 1.2335 1.2370 1.2410