The EUR/USD currency pair is undergoing a challenging test as it works through a significant resistance zone. At the same time, the U.S. job market is experiencing unmistakable signs of a slowdown. U.S. job openings are predicted to fall for the third consecutive month, according to analysts. They predict the count will climb to 7.1 million this April. Policymakers and advocates alike should be worried about a downturn in the labor market. The latest minutes from the Federal Reserve’s meetings underscore these concerns.
The EUR/USD has a resistance zone that extends from 1.1530 to 1.1575. This range is the top of a three-month bullish inclination and coincides with the April 21 high. If the duo manages to clear this level, then look for more resistance ahead. The static and round figure 1.1700 and 1.1780 make up the top end of the current upward channel.
Technical Analysis of EUR/USD
The present technical landscape for EUR/USD supports a bullish momentum buildup. The daily Relative Strength Index (RSI) sits just above 60. This combination points to the fact that this pair is under strong upward pressure. Buyers and sellers are watching the price closely as it moves further away from the 20-day SMA, which is at 1.1280. This change might be a harbinger of new trading opportunities.
Eren Sengezer, European Session Lead Analyst at FXStreet, highlighted this bullish outlook by stating, > “The near-term technical outlook points to a buildup of bullish momentum in [EUR/USD]. The Relative Strength Index (RSI) indicator on the daily chart stays near 60 and the pair pulls away from the 20-day Simple Moving Average, currently located at 1.1280, after dipping below it in the previous week.”
The recent move above the 20-day SMA is a sign of increasing bullish sentiment from the market participants. They have faith in the euro’s continued strength versus the dollar. In that case, a sustained move above those resistance levels could set the stage for stronger price gains in the weeks ahead.
Support Levels and Market Sentiment
Though EUR/USD is at resistance now, traders should not overlook where this pair may find support. The first major support zone lies at 1.1280. This area aligns with the 20-day SMA and the Fibonacci 23.6% retracement level. If this level doesn’t hold, we could expect support between 1.1200 and 1.1180. This range is supported by the 50-day SMA and marks the lower extreme of the overall ascending channel.
Moreover, an extended decline might eventually bring the Fibonacci 38.2% retracement of the 2022/23 surge at 1.1080 into play. Support levels will prove pivotal in determining the future direction of EUR/USD. Only they can say if the currency pair can muster more bullish momentum or whether bears will knock it back down.
Sentiment towards EUR/USD is mainly driven by macro factors, focused on the scheduled release of the U.S. labor market data in particular. That’s a trend worth watching, with the job openings report set to drop Wednesday afternoon just ahead of the May employment report due on Friday.
U.S. Job Market Overview
Since peaking in March 2022, the U.S. job market has consistently shed job openings. It was as high as 12 million, but those figures have been dropping like a rock. This troubling decline has recently spurred fears by some Federal Reserve policymakers of a sharp slowdown in economic activity. According to recent minutes from the Fed’s latest policy meeting, officials are growing more fearful about unemployment climbing.
Declines in job openings are anticipated to bring the number down to 7.1 million come April. Experts say this drop is symptomatic of more systemic issues regarding the overall stability of today’s labor market. A 33 percent rise in openings indicates a booming labor market. If declines continue, they may uncover deeper flaws.
For example, the U.S. dollar (USD) is the world’s most traded currency, constituting about 88% of global trades. In 2022, it accounted for more than 88% of all foreign exchange turnover and an average of $6.6 trillion traded daily. This prominence highlights the dramatics of labor market conditions on a nationwide and global stage.