- EUR/USD is heading into a key resistance level ahead of US jobs date Friday.
- Markets are showing cautionary optimism over easing of lockdown measures.
- Bears looking for a break of the late April lows down at 1.0727 while bulls seek out the 1.09 handle.
EUR/USD has recovered from the 1.0764 lows on Thursday and has reached a high which meets a prior support level guarding room towards the 1.09 handle. At the time of writing, EUR/USD is trading at 1.0828, +0.33% having travelled from a low of 1.0766 to a high of 1.0833.
The US dollar is under pressure towards the end of the week and head of the Nonfarm Payrolls on Friday. At the same time, equities have been performing well, for no particular reason, although buoyed by the abundance of central bank liquidity and elevated by a gradual lifting of lockdowns.
Markets elevated on easing of lockdown restrictions
In Europe, European Central Bank’s President Lagarde said it must take all measures to weather crisis and that it is hard to get a read on how badly the economy is. Meanwhile, France has been the latest nation to join the other major European economies in announcing measures to roll back lockdown restrictions. French industrial production fell 16.2% MoM in March and with the tourism trade shattered by COVID-19, the loosening of restrictions on businesses is hoped to revive some activity to gradually get the economy up and running again. This weekend, UK’s PM Boris Jonson is scheduled to make an announcement as well, expecting to authorise a limited easing of restrictions, although strict social distancing is expected to remain until late May (26th).
Meanwhile, US Nonfarm payrolls are expected to fall by 21.7 million with unemployment skyrocketing to 16%. “The challenge ahead for the labour market is how many jobs have been permanently displaced and how quickly unemployment will fall,” analysts at ANZ Bank explained.
The price action has seen the pair grind higher from a key support zone in the 1.0760s (early April support) with bulls now testing the prior support if the drop from the 1.09 handle. A break here, 1.0840, opens the 1.09 handle again. Failure here will likely see the bears capitalise ina cheaper dollar looking for a break of the late April lows down at 1.0727.