The EURUSD pair remained under pressure as the market reacted to weak data from Europe and the United States.
US jobless claims numbers rise
The economic damage brought by the coronavirus pandemic continued to rise according to the Department of Labour. The data showed that more than 4.4 million Americans filed for unemployment benefits last week. This was worse than the 4.2 million that analysts were expecting. On a positive side, the total number of claims appear to be falling after peaking at 6.8 million in March. Still, the damage is enormous since more than 26 million Americans have filed for claims.
While these numbers appear bad, the reality is that many Americans are filing for claims while having their jobs. This is because the recently-passed CAREs act widened the scope of people who can apply for these claims. As such, the number will likely fall further when the economy reopens.
The continuing jobs numbers rose to 15.9 million from the previous 11.9 million. Later today, we will receive the new home sales data and manufacturing numbers from the EU.
EU PMIs tank
On the other side of the EURUSD equation, we received weak manufacturing and services PMI data from Europe. The manufacturing PMI dropped to 33.6 from the previous 44.5. This was the lowest number in decades. In a statement, Markit said that more than 80% of companies it surveyed said that they were seeing less sales. In Germany, the manufacturing PMI declined to 34.4 while in France, it dropped to a low of 31.5.
The services sector was not spared either. In the eurozone, the services PMI dropped to 11.7 from the previous 26.4. This was driven by a significant slowdown in activity across the region. In France and Germany, the PMI dropped to a low of 10.4 and 15.9 respectively.
At the same time, investors are focused on the bickering about the next round of financing. Some members prefer raising funds together while others are opposing this. Also, the euro is reacting to news that the ECB will guarantee risky companies.
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EURUSD technical outlook
On the three-hour chart, we see that the EURUSD pair moved to an intraday low of 1.0755, which was the lowest level since March 24. The price has then moved upwards and is now trading slightly below the 38.2% Fibonacci retracement level of 1.0827. This retracement was drawn by connecting the highest level on March 27 and the lowest level on March 23.
Also, the chart shows that the pair is in an overall bearish trend. It is also forming a descending triangle pattern. Therefore, I expect the pair’s downward trend to accelerate if the pair sustains moves below the 1.0766 support.
On the flipside, it is possible that the pair will attempt to retest the 50% retracement at 1.0950 now that it has found some support at the 1.0766 support.
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