EUR/USD Forecast: Euro bulls hesitate after robust US data
- EUR/USD stays in a consolidation phase below 1.1900 on Thursday.
- The US Dollar stays resilient against its rivals after January employment data.
- The near-term technical outlook reflects a loss of bullish momentum.
EUR/USD closed in negative territory on Wednesday as the US Dollar (USD) staged a rebound following the release of the labor market data for January. Early Thursday, the pair moves sideways in a narrow channel below 1.1900.
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.59% | -0.37% | -2.98% | -0.75% | -1.55% | -0.82% | -0.99% | |
| EUR | 0.59% | 0.22% | -2.44% | -0.16% | -0.97% | -0.23% | -0.39% | |
| GBP | 0.37% | -0.22% | -2.34% | -0.39% | -1.19% | -0.45% | -0.61% | |
| JPY | 2.98% | 2.44% | 2.34% | 2.31% | 1.49% | 2.26% | 1.98% | |
| CAD | 0.75% | 0.16% | 0.39% | -2.31% | -0.69% | -0.05% | -0.23% | |
| AUD | 1.55% | 0.97% | 1.19% | -1.49% | 0.69% | 0.74% | 0.58% | |
| NZD | 0.82% | 0.23% | 0.45% | -2.26% | 0.05% | -0.74% | -0.15% | |
| CHF | 0.99% | 0.39% | 0.61% | -1.98% | 0.23% | -0.58% | 0.15% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
The US Bureau of Labor Statistics announced on Wednesday that Nonfarm Payrolls (NFP) increased by 130,000 in January, following the 48,000 (revised from 50,000) increase recorded in December. This print surpassed the market expectation of 70,000 by a wide margin and boosted the USD with the immediate reaction. Other details of the report showed that the Unemployment Rate edged lower to 4.3% from 4.4%, while the Labor Force Participation Rate ticked up to 62.5% from 62.4%.
The probability of the Federal Reserve (Fed) leaving the policy rate unchanged in March drop below 10% from about 20% before the US employment data, according to the CME FedWatch Tool.
On Thursday, weekly Initial Jobless Claims data will be featured in the US economic calendar. Ahead of Friday's January inflation report, however, investors could ignore this data.
Meanwhile, US stock index futures were last seen rising between 0.2% and 0.3% on the day. In case risk flows dominate the action in financial markets in the second half of the day, the USD could struggle to gather further strength and allow EUR/USD to keep its footing.
EUR/USD Technical Analysis:
In the 4-hour chart, EUR/USD trades at 1.1880. The 100- and 200-period SMAs slope higher, underscoring broader upside pressure. Price holds above the 50, 100 and 200 SMAs, yet trades just under the 20 SMA at 1.1893. The 14-period RSI stands at 52 (neutral), reflecting a lack of directional momentum in the near term.
Measured from the 1.1590 low to the 1.2026 high, the 38.2% retracement at 1.1860 offers immediate support, with the 50% retracement at 1.1808 further down the ladder. A sustained push above the 20 SMA would open the path toward the 23.6% retracement at 1.1923 ahead of 1.2000 (psychological level, static level).
(The technical analysis of this story was written with the help of an AI tool.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Premium
You have reached your limit of 3 free articles for this month.
Start your subscription and get access to all our original articles.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
