EUR/USD Daily Forecast – Euro Drops Below 1.0800 Handle On Continued Weakness

Volatility has returned to EUR/USD as the pair rose sharply higher in the second half of last week to briefly trade above the 1.1000 level only to decline every day this week thus far, giving back the gain.

The pair has been weighed by a number of factors including a stronger dollar and weak economic data from the euro area this week.

PMI data released yesterday showed the services sector in the euro area virtually coming to a halt as the impacts of the Coronavirus, and the lockdown to contain it, wreak havoc on the economy.

In line with the string of poor data, retail sales in Italy were reported to decline a staggering 20.5% in March. To provide some perspective, it’s rare to see a decline or rise greater than 1% in this particular report.

Later in the day, the US will release its weekly unemployment claims report. The data will be closely watched as it is more current than most other economic reports. At the same time, the markets have not shown a significant reaction to these reports as of late.

Analysts are expecting an additional 3 million people to have filed for claims after 3.8 million claims were filed in the week prior.

The ADP released its employment data yesterday which showed just over 20 million jobs lost in the US last month. The data was not surprising as the weekly jobless claims figures had hinted at a loss around the same magnitude.

Technical Analysis

EUR/USD trades near support at 1.0775 which reflects the lowest daily close in April. The pair is dangerously close to a technical breakdown although it will take a sustained drop below 1.0775 to open up the downside, from a technical perspective.

For the session ahead, notable resistance is seen at 1.0819 as the level has acted as both support and resistance in recent times. Beyond that, further resistance is seen at 1.0842.

A break below 1.0775 shows the next level of downside support at 1.0756 as the level held the pair higher last month on a 4-hour closing basis.

Bottom Line

• EUR/USD continues to tumble and is attempting to post a fourth consecutive day of losses.
• The pair is near critical support at 1.0775. The reaction from the level stands to set the tone over the near-term.