Key Highlights
- EUR/USD started a downside correction after trading to a new multi-month high at 1.2349.
- There was a break below a key bullish trend line at 1.2265 on the 4-hours chart.
- GBP/USD also corrected lower after testing the 1.3700 resistance.
- The US nonfarm payrolls dropped 140K in Dec 2020, whereas the forecast was +71K.
EUR/USD Technical Analysis
The Euro followed a bullish path above the 1.2200 and 1.2250 levels against the US Dollar. EUR/USD traded to a new multi-month high a 1.2349 before it started a downside correction.
Looking at the 4-hours chart, the pair corrected lower below the 1.2320 and 1.2300 support levels. There was also a break below a key bullish trend line at 1.2265.
The pair gained pace below the 1.2250 support and it even broke the 76.4% Fib retracement level of the upward move from the 1.2209 swing low to 1.2349 high. There was also a spike below the 1.2209 low and the 100 simple moving average (red, 4-hours).
The next major support is near the 1.2170 zone or the 1.236 Fib extension level of the upward move from the 1.2209 swing low to 1.2349 high. The main support could be 1.2150.
Any more losses could lead the pair towards the 1.2120 support and the 200 simple moving average (green, 4-hours). On the upside, the 1.2260 level is an initial resistance. The first key resistance is near the 1.2300 level, above which the pair could rise towards 1.2350.
Fundamentally, the US nonfarm payrolls figure for Dec 2020 was released this past Friday by the US Bureau of Labor Statistics. The market was looking for an increase in jobs by 71K.
The actual result disappointing, as there was a sharp decline of 140K in NFP. Besides, the US unemployment rate remained at 6.7%.
The report added:
The decline in payroll employment reflects the recent increase in coronavirus (COVID-19) cases and efforts to contain the pandemic. In December, job losses in leisure and hospitality and in private education were partially offset by gains in professional and business services, retail trade, and construction.
Overall, EUR/USD might find bid near 1.2175 or 1.2120 if it continues to move down. Looking at GBP/USD, there was a downside correction, but the bulls are seen active near 1.3500.
Economic Releases
Euro Zone Sentix Investor Confidence for Jan 2020 – Forecast 0, versus -2.7 previous.
