EUR/USD still vulnerable for the further decline

The EUR/USD pair traded better during the early part of Monday’s trading. However, the EUR remained defensive amid the third wave of COVID-19 infections in Europe. There are concerns that pandemic-related restrictions in Europe could derail the fragile economic recovery amid the slow pace of vaccination. This, in turn, was seen as a critical factor holding off the pair’s attempt to rally from the 1.1700 mark, close to the five-month lows touched last week. However, a dovish action in the US dollar price extended some support to the pair and helped limit any further losses, at least for now.

Economic data for the US is upbeat and promising. A monthly US jobs report showed that the economy added 916,000 new jobs in March. This marked the third consecutive month of job growth and the biggest gain since last August. 

The February reading was also revised up to 468,000 from 379,000 previously reported, and the unemployment rate fell to 6.0% from 6.2% previously. The data bolstered prospects for a relatively faster US economic recovery from the pandemic.

Besides, President Joe Biden unveiled his $2 Trillion Plan to rebuild Infrastructure and reshape the economy. 

These factors keep pushing US Treasury yields higher. Rising yields could limit the EUR/USD bounce. 

The dollar struggles to benefit from the upbeat economic data

The US dollar struggled to capitalize on Friday’s positive move led by the successful monthly US jobs report. The USD bulls did not appear impressed by the supporting factors. The market participants now look forward to the US ISM Non-Manufacturing PMI publication to get some momentum amid relatively tight liquidity conditions following the Easter Monday holiday in European markets.

Short-term technical outlook

From a technical perspective, analysts think that the pair’s inability to gain significant traction supports prospects for extending the recent downward trajectory. 

Bearish traders are likely to wait for some subsequent sell below the 1.1700 mark before positioning for any further depreciation moves. The pair could become vulnerable to accelerate the decline and test the 1.1620-15 support area. The level is closely followed by the 1.1600 mark, which should pave the way for a slide towards the key psychological 1.1500 mark if broken.

On the other hand, any significant upside is likely to face stiff resistance and risk fading quickly near the 1.1800 mark. However, a sustained force beyond could trigger a short-covering move and push the pair towards the strong support breakpoint at 1.1860.