After closing in negative territory on Thursday, the EURUSD has risen over 1.1000. During European trading hours on Friday, the pair remains relatively quiet as investors remain on the sidelines ahead of the US jobs report for April.
As predicted, the European Central Bank (ECB) upped its main interest rates by 25 basis points (bps). Although the ECB did not confirm additional rate hikes in the policy statement, ECB President Christine Lagarde clarified that the tightening cycle was not paused. Lagarde emphasized that there were still big upside risks to inflation and admitted that some governors believed a 50-basis point raise would be reasonable.
Investors are becoming increasingly anxious about a worsening financial crisis in the United States.
Despite Lagarde’s hawkish statements, the EURUSD failed to gain traction on Thursday as another round of volatility occurred. Investors sought safety as a result of a selloff in the shares of US regional banks. As a result, the US Dollar (USD) has remained strong versus its rivals.
US market index futures are trading in positive territory early Friday. If risk flows resume before the weekend, the USD may struggle to find demand. The USD, on the other hand, should be able to keep its footing if regional bank shares continue to fall.
Market players will also be paying particular attention to labor market statistics from the United States. Nonfarm payrolls are expected to climb by 179,000 in April. investors are now confident that the US Federal Reserve will maintain its policy rate in June. A positive NFP result near 250K might rekindle hopes for another rate rise in June, helping the USD gain strength in the short term.
EURUSD Technical Outlook
EURUSD is trading at the lower end of the long-term ascending regression channel, which is now at 1.1030. The 50-period Simple Moving Average (SMA) confirms this level as well.
If the EURUSD confirms that level as support, it may encounter interim resistance at 1.1050 (static level) before aiming for 1.1080 (mid-point of the ascending channel) and 1.1100 (psychological level, static level).
On the downside, 1.1000 (100-period SMA, psychological level) is a critical support level. A four-hour closure below that level may entice bears and send the pair down to 1.0950 (Fibonacci 23.6% retracement) and 1.0930 (200-period SMA).
