EURUSD has been consolidating slightly off the four-session high seen yesterday at 1.1305. The high was the product of a weaker Dollar, which declined concomitantly with Treasury yields following more benign than expected CPI data out of the US, which should keep the Fed on the sidelines. EURUSD is near flat versus levels seen a week ago, recouping the losses seen following last Thursday’s unexpected ECB decision for another blast of TLTRO lending. Last Friday’s US jobs report disappointed significantly at the headline level, but components were much better while the low jobs number can be largely attributed to an outsized weather hit through the BLS survey week, especially in the goods sector overall and construction in particular. The monthly aggregates for February should prove stronger than the data from the BLS survey week, and expectations are for a solid 230k March payroll bounce as weather distortions are reversed. Overall, there is a fundamental bearish view of EURUSD given the relative health of the US economy and with the ECB having taken an actual easing action as opposed to the Fed’s pause and continued tightening via the post-QE balance sheet roll-off.
Technically, EURUSD has resistance (R1) at 1.1315-20, which also includes the 20-day moving average and support (S3) at last week’s low (March 7 & 8) at 1.1200-1190. The 20, 50 and 200-day moving averages are aligned and sloping lower, MACD is under the 0 line and remains weak and RSI at 46 is neutral.
Head Market Analyst
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