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EUR/USD Forecast: Holding Above 1.2000, But Unable To Post A Substantial Bounce

Valeria Bednarik - Chief Analyst at FXStreet
·2 min read

EUR/USD Current Price: 1.2026

  • EU final Services PMIs confirmed at contraction levels in January by Markit.

  • US employment-related data surprised to the upside ahead of the Nonfarm Payroll report.

  • EUR/USD is holding above 1.2000, but unable to post a substantial bounce.

The EUR/USD pair traded as low as 1.2003, ending the day with losses around 1.2020 as US Democrats senators pushed forward with a coronavirus-aid package, aiming to pass legislation without Republicans support.0. The dollar maintains its strength Optimism receded after Wall Street’s opening, with stocks indexes mixed, despite encouraging news. The dollar gave up just modestly as US indexes failed to run.

Markit published the final versions of the EU Services PMIs, with the German one downwardly revised to 46.7. The EU final Composite PMI for the month was confirmed at 47.8. The economic contraction was led by the services sector, as activity there contracted for a fifth consecutive month.

The US published the ADP survey on private jobs’ creation, which showed that the country added 174K new positions in January, much better than the 49K expected and the previous -123K. Markit released the final US Services PMI, which was upwardly revised to 58.3, while the official ISM index resulted at 58.7, slightly better than expected.

This Thursday, the EU will publish December Retail Sales, seen advancing a modest 0.3% MoM. During US trading hours, the focus will be on employment-related data ahead of Friday’s Nonfarm Payroll release. Initial Jobless Claims are expected to have contracted to 830K in the week ended January 29.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair has fallen for a third consecutive day, posting lower lows ever since the week started, a sign of substantial selling interest. Still, bears seem to be intimidated by the psychological 1.2000 threshold. The bearish case remains firmly in place, as in the 4-hour chart, the 20 SMA has accelerated its decline to converge with a Fibonacci level at 1.2060. Technical indicators have bounced from intraday lows, but remain within negative levels after losing their strength upwards.

Support levels: 1.2010 1.1970 1.1925

Resistance levels: 1.2060 1.2095 1.2140

View Live Chart for the EUR/USD

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