EUR/USD: Euro Ricochets Off 200-Day SMA Resistance at $1.0790. What’s Next?

US economic data propels the exchange rate as traders position for dollar decline. But there’s a long-term resistance ahead.

• The EURUSD pair shifted gears Thursday only to be stopped out by a looming long-term resistance near the $1.0790 level. The 200-day Simple Moving Average (SMA), tracking the average closing price of the pair over the last 200 days, prevented the euro from moving higher and the rally went out of breath. The indicator has been acting as a sell wall for traders who’ve been trying to overcome it for the past six trading days.
• What’s next for the pair? Technically, the euro should either reverse course and turn lower if bulls aren’t strong enough to break out. Or it could cross $1.08 and close a full candle above that level for the trend’s extension to be confirmed with a new leg up. Either way, there’s enough incoming data to shake up the forex landscape and help the euro-dollar make a decision.
• The latest on the economic front suggested that the labor market in the US is cooling. Weekly jobless claims, a proxy for weekly layoffs, showed that 231,000 Americans applied for unemployment benefits. The print hit an 8-month high and topped the previous week’s 209,000. Moreover, it arrived after April’s cool 175,000 nonfarm payrolls figure. All of that helps the Federal Reserve in its quest to lower interest rates in the coming months. And that suggests a cheaper dollar.