EUR/USD Is Bearish In The Short-Term, May Accelerate Its Slump With An Upbeat NFP

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EUR/USD Current Price: 1.2126

• The US Federal Reserve announced it would start winding down its portfolio.
• Upbeat US data fueled demand for the greenback ahead of the Nonfarm Payrolls report.
• EUR/USD is bearish in the short-term, may accelerate its slump with an upbeat NFP.

The American dollar was the best performer this Thursday, soaring against all of its major rivals. The EUR/USD pair plummeted to 1.2119, its lowest since mid-May, initially weighed by the US Federal Reserve, as the central bank announced on Wednesday that it will begin winding down one of its programs set to support the economy throughout the pandemic. "Portfolio sales will be gradual and orderly and will aim to minimize the potential for any adverse impact on market functioning," the Fed said.

The sour tone of equities due to tapering speculation backed the greenback during the European session, although it was upbeat US data, which boosted demand for the dollar. The country published the ADP survey on private jobs creation, which posted a whopping 978K in May, largely surpassing the 650K expected.  Initial Jobless Claims for the week ended May 28 printed at  385K, better than the 395K expected and the lowest reading since the pandemic started. Finally, the ISM Services PMI jumped to 64 in May, beating expectations.

On Friday, the US will publish the May Nonfarm Payrolls report. The country is expected to have added 644K new jobs in May, while the unemployment rate is foreseen at 5.9% from 6.1% in the previous month. An upside surprise in those two numbers could further boost demand for the dollar as it will add pressure on the Fed to tighten its monetary policy.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair trades near the mentioned daily low and has room to fall further. The 4-hour chart shows that, after meeting selling interest around a now bearish 20 SMA, the pair has broken below the 100 and 200 SMAs. Technical indicators reached oversold readings, paring their declines but holding nearby without signs of exhaustion. The immediate support comes now at 1.2115, with a break below it, probably resulting in an approach to the 1.2000 threshold.

Support levels: 1.2115 1.2070 1.2020

Resistance levels: 1.2160 1.2200 1.2245

Image Sourced from Pixabay

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.