The EURUSD concluded the week on a negative note, reaching a closing rate of 1.07860 on Friday.
The EURUSD concluded the week on a negative note, reaching a closing rate of 1.07860 on Friday. The negative performance was influenced by positive Non-Farm Payrolls, which added 353,000 new jobs in January, exceeding the forecasted expectations of 187,000, leading to a subsequent rise in the U.S. Dollar. Traders will closely monitor the currency pair during this week's release of significant economic data and their potential impact on currency valuations.
Upcoming Economic Events
Monday 15:00 (GMT): ISM Services PMI
Tuesday 10:00 (GMT): European Union Retail Sales
The EURUSD pair has been following a text-book-like downtrend since December 28, after registering a high price at 1.11394. The technical reversal to the downside, known as the failure swing, on January 16 breached the key support level of 1.08766, opening the way to a further decline, registering successively lower peaks and lower troughs. It's worth highlighting that the reversal is in agreement with both the Moving Average and the Momentum Oscillator. During this period, prices consistently remained below the 50-period Moving Average, and the Momentum Oscillator fell below its 100 baseline, further reinforcing the bearish momentum in the market.
Potential Downside Targets
Should the bearish momentum continue to dominate the market, there are four potential downside targets that traders may consider:
1.07448: The first target stands at 1.07448, aligning with the first support level utilizing the weekly Pivot Point Standard method.
1.07233: The second price objective is estimated at 1.07233, corresponding to the trough established on December 8.
1.06802: The third price objective is calculated at 1.06802, representing the 261.8% Fibonacci extension linked to the failure swing, formed by the trough at 1.08766 and the peak at 1.09993, respectively.
1.06272: An additional potential support level could be calculated at 1.06272 using the weekly Pivot Point Standard method calculation.
Conclusion and Considerations
In conclusion, the EURUSD currency pair heightened downside risks as bearish momentum prevailed. The breach of the critical support at 1.08766 and positive Non-Farm Payrolls signaled potential further declines. Continued bearish sentiment suggests a potential scenario of lower exchange rates, emphasizing the need for cautious monitoring and risk management in the volatile currency market. Additionally, staying informed about economic events and geopolitical developments will be essential in making informed trading decisions in the EUR/USD market.