EUR/USD: Here’s the next level to watch after the bearish breakout
- The EUR/USD suffered a bearish breakout after the weak US jobless claims data.
- More than 965,000 people filed for jobless claims last week.
- This increases the likelihood of a bigger stimulus by the Biden administration.
The EUR/USD made a bearish breakout today after the relatively weak US initial jobless claims numbers. The pair dropped to an intraday low of 1.2118, which was the lowest level since December 15.
US initial jobless claims
The situation in the United States worsened last week as the number of people filing for jobless claims rose. According to the Bureau of Labour Statistics (BLS), more than 965,000 Americans filed for unemployment insurance. That was worse than the previous week’s 784,000 and the median estimate of 795,000. It is also the highest figure in five months.
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The lagging continuing jobless claims figure also rose from more than 5.07 million to 5.27 million. This increase is mostly due to the ongoing lockdowns in most parts of the country. It also means that the American economy is yet to fill more than 10 million jobs that disappeared due to the pandemic.
The data came a few days after the BLS released weak nonfarm payroll numbers. The data showed that the economy lost more than 140,000 jobs last month while the unemployment rate remained steady at 6.7%.
These numbers came on the same day that Joe Biden is set to unveil his stimulus proposal that could range between $2 trillion and $3 trillion. Also, they came a few hours after China released strong exports and imports data.
The EUR/USD is also reacting to the relatively strong export and import price index. The two numbers rose by 1.1% and 0.9%, respectively in December. Later today, investors in forex will react to a speech by Jerome Powell, the Fed Reserve chair.
EUR/USD technical outlook
In a report yesterday, we noted that the EUR/USD was gearing for a bearish breakout. This happened today after the weak jobless claims data. It is trading at 1.2122, which is slightly below the vital support at 1.2133.
The price has managed to move below the 50-day and 200-day moving averages, signaling that bears are now in control. It has also extended moves below the 23.6% Fibonacci retracement level. Therefore, the pair will likely continue falling as bears target the 38.2% retracement at 1.2062.