EUR/USD Forecast: Momentum favors the Euro ahead of NFP
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UPGRADE- US Initial Jobless Claims rise lower than expected, focus turn to Nonfarm Payrolls.
- The US Dollar weakens as US Treasury yields decline from multi-year highs.
- The EUR/USD shows potential for further gains ahead of new US jobs data.
The EUR/USD has risen for the second consecutive day, approaching the 1.0550 area. The pair has been boosted by a weaker US dollar, moving away from its ten-month lows. However, the trend remains bearish, and the next direction will depend on US jobs data.
Germany reported a larger-than-expected decline in exports for August (-1.2% vs. -0.4%) and an unexpected contraction in imports (-0.4% vs. 0.5%). Imports are 16.7% lower compared to the previous year. Germany will release Factory Orders data for August on Friday.
The soft economic data supports the prevailing expectation that the European Central Bank (ECB) is unlikely to raise interest rates further. Comments from ECB members have also signaled this direction.
In the US, despite the soft ADP report on Wednesday, Jobless Claims data indicates tight job market conditions. However, US yields declined further from multi-year highs. The weakening of the Greenback can also be attributed to a recovery in equity prices.
The upcoming US Nonfarm Payrolls report on Friday will likely determine the US dollar's direction. Expectations are for an increase of 170,000 jobs and a slight decrease in the Unemployment Rate to 3.7%. A strong report could trigger a resumption of the EUR/USD bearish trend, while weak numbers could expand the scope for further recovery.
EUR/USD short-term technical outlook
After hitting a ten-month low around 1.0450 on Tuesday, the EUR/USD started a recovery, accumulating a gain of over a hundred pips. However, this move is considered corrective for now. If there is a daily close above 1.0630, it would strengthen the outlook for the Euro.
On the 4-hour chart, the EUR/USD continues to move within a downward channel but has moved away from the lower boundary. The price is above the 20-period Simple Moving Average (SMA) and faces an intermittent uptrend line at 1.0565. A break above this line would increase the likelihood of further upside movement toward 1.0600. The 1.0525 area is the immediate support level, followed by the 1.0500 level. If consolidation occurs below 1.0495, it could expose the recent lows, and a break below those could lead to further downside targeting levels near 1.0420.
- US Initial Jobless Claims rise lower than expected, focus turn to Nonfarm Payrolls.
- The US Dollar weakens as US Treasury yields decline from multi-year highs.
- The EUR/USD shows potential for further gains ahead of new US jobs data.
The EUR/USD has risen for the second consecutive day, approaching the 1.0550 area. The pair has been boosted by a weaker US dollar, moving away from its ten-month lows. However, the trend remains bearish, and the next direction will depend on US jobs data.
Germany reported a larger-than-expected decline in exports for August (-1.2% vs. -0.4%) and an unexpected contraction in imports (-0.4% vs. 0.5%). Imports are 16.7% lower compared to the previous year. Germany will release Factory Orders data for August on Friday.
The soft economic data supports the prevailing expectation that the European Central Bank (ECB) is unlikely to raise interest rates further. Comments from ECB members have also signaled this direction.
In the US, despite the soft ADP report on Wednesday, Jobless Claims data indicates tight job market conditions. However, US yields declined further from multi-year highs. The weakening of the Greenback can also be attributed to a recovery in equity prices.
The upcoming US Nonfarm Payrolls report on Friday will likely determine the US dollar's direction. Expectations are for an increase of 170,000 jobs and a slight decrease in the Unemployment Rate to 3.7%. A strong report could trigger a resumption of the EUR/USD bearish trend, while weak numbers could expand the scope for further recovery.
EUR/USD short-term technical outlook
After hitting a ten-month low around 1.0450 on Tuesday, the EUR/USD started a recovery, accumulating a gain of over a hundred pips. However, this move is considered corrective for now. If there is a daily close above 1.0630, it would strengthen the outlook for the Euro.
On the 4-hour chart, the EUR/USD continues to move within a downward channel but has moved away from the lower boundary. The price is above the 20-period Simple Moving Average (SMA) and faces an intermittent uptrend line at 1.0565. A break above this line would increase the likelihood of further upside movement toward 1.0600. The 1.0525 area is the immediate support level, followed by the 1.0500 level. If consolidation occurs below 1.0495, it could expose the recent lows, and a break below those could lead to further downside targeting levels near 1.0420.
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