EUR/USD Forecast: Markets stable ahead of critical US employment data
|EUR/USD Current Price: 1.0907
- Investors trapped between optimism about softer monetary policies and slower growth.
- US employment data missed expectations ahead of the Nonfarm Payrolls report.
- EUR/USD is technically neutral-to-bullish in the near term, needs to regain 1.0930.
The EUR/USD pair struggles to retain the 1.0900 level on Thursday, as the US Dollar rallied on renewed growth-related concerns late Wednesday. United States data released this week fell short of expectations, indicating slower economic progress amid the aggressive monetary tightening decided by the Federal Reserve (Fed) in March 2022. The Fed took such measures on the back of skyrocketing inflation, and indeed, they seem to have worked.
The Consumer Price Index (CPI) peaked at 9.1% YoY in 2022, currently at 6%. Despite being far from the central bank’s target of around 2%, easing prices pressure encouraged investors, pushing high-yielding assets up against the Greenback. However, the same measures that cooled inflation weighed on growth.
Soft United States employment figures
Uncertainty underpinned safe-haven assets, with Gold being the best performer, trading at around $2,020 a troy ounce, not far from record highs at $2,075. At the same time, dismal US data limits demand for the American Dollar, despite its safe status.
Asian stock markets were sharply down, although European indexes shrugged off concerns and trade in the green, helping Euro recover some poise. US futures, in the meantime, hover around Wednesday’s closing levels, as well as Treasury yields.
Data-wise, Germany published February Industrial Production, which rose by 2% YoY, better than anticipated. The US published March Challenger Job Cuts, showing US-based employers announced 89,703 cuts in March, up 15% from the 77,770 reported in February. Also, Initial Jobless Claims for the week ended March 31 were up 228K, worse than the 200K expected.
Employment-related data gains relevance ahead of the Nonfarm Payrolls report being out on Friday. The country is expected to have added 240K new jobs in March, while the Unemployment Rate is expected to have remained steady at 3.6%.
EUR/USD short-term technical outlook
The daily chart for the EUR/USD pair shows that it consolidates gains, with the risk of a steeper decline still out of the table. The pair develops above bullish moving averages, with the 20 Simple Moving Average (SMA) extending its advance beyond the longer ones while providing dynamic support at around 1.0790. Technical indicators, on the other hand, have lost their upward strength. The Momentum indicator turned lower and declines within positive levels, while the Relative Strength (RSI) indicator holds directionless around 59 in consolidation mode.
In the near term, and according to the 4-hour chart, bulls are battling to recover the ground lost. Technical indicators briefly pierced their midlines but are currently recovering and aiming to regain positive ground. At the same time, EUR/USD seesaws around a bullish 20 SMA, while the longer moving averages maintain their bullish slopes far below the shorter one.
Support levels: 1.0885 1.0840 1.0790
Resistance levels: 1.0930 1.0985 1.1020
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