EUR/USD Risks Larger Decline on Failure to Close Above 1.3800

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Talking Points:

- USDOLLAR Risks Inside Day (Harami)- April Opening Range in Focus

- EUR/USD Continues to Test 1.3800 Ahead of ECB Meeting

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10525.53

10536.92

10512.29

0.03

67.06%

USDOLLAR Daily

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Forex-EURUSD-Risks-Larger-Decline-on-Failure-to-Close-Above-1.3800_body_Picture_3.png, EUR/USD Risks Larger Decline on Failure to Close Above 1.3800

Chart - Created Using FXCM Marketscope 2.0

  • May Post Bullish Inside-Day, But Bearish Price & RSI Continues to Favor Downside
  • Interim Resistance: 10,602 (38.2 retracement) to 10,615 (78.6 expansion)
  • Interim Support: 10,470 Pivot

Release

GMT

Expected

Actual

Markit Purchasing Manager Index Manufacturing (MAR F)

13:45

56.0

55.5

ISM Manufacturing (MAR)

14:00

54.0

53.7

ISM Prices Paid (MAR)

14:00

59.5

59.0

Construction Spending (MoM) (FEB)

14:00

0.0%

0.1%

IBD/TIPP Economic Optimism (APR)

14:00

46.0

48.0

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The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) holds with the previous day’s range amid the mixed batch of data coming out of the world’s largest economy, and the greenback may continue to consolidate ahead of the highly anticipated Non-Farm Payrolls (NFP) report due out later this week as the region is expected to add another 200K jobs in March.

Indeed, a pickup in U.S. job growth may instill a bullish outlook for the greenback as it raises the Federal Open Market Committee’s (FOMC) scope to normalize monetary policy sooner rather than later, but a dismal employment print would certainly raise the risk of seeing a further decline in the reserve currency as Chair Janet Yellen adopts a more dovish tone for monetary policy.

With that said, we will watch the monthly opening range as the dollar retains the bearish trend from earlier this year, and the greenback remains at risk of carving a lower low as the central bank remains reluctant to move away from its zero-interest rate policy (ZIRP).

Read More:

Can USDJPY Finally Trade Higher? 3 Critical Factors we’re Watching

April Forex Seasonality Favors US Dollar Weakness - Against Whom?

Forex-EURUSD-Risks-Larger-Decline-on-Failure-to-Close-Above-1.3800_body_ScreenShot015.png, EUR/USD Risks Larger Decline on Failure to Close Above 1.38...

EURUSD Daily

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Forex-EURUSD-Risks-Larger-Decline-on-Failure-to-Close-Above-1.3800_body_Picture_1.png, EUR/USD Risks Larger Decline on Failure to Close Above 1.3800
  • Failure to Close Above 1.3800 Highlights Risk of Larger Correction
  • Interim Resistance: 1.3960-70 (61.8 expansion)
  • Interim Support: 1.3600 Pivot to 1.3620 (23.6 retracement)

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The greenback strengthened against three of the four components, led by a 0.28 percent decline in the Japanese Yen, while the Euro bucked the trend, with the EUR/USD making another run at the 1.3800 handle.

The EUR/USD may stay afloat going into the European Central Bank (ECB) meeting as the Governing Council is widely expected to retain its current policy in April, but the single currency may face a larger correction in the days ahead should President Mario Draghi lay the foundation for a further expansion in its easing cycle.

As a result, a more dovish ECB policy statement may generate a move back into the 1.3600 region, but a break below 1.3500 handle would lead us to adopt a more bearish outlook for the single currency as it would negate the series of higher highs & higher lows in the exchange rate.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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