EUR/USD Forecast: Euro buyers step away ahead of US NFP
- EUR/USD moves sideways in a narrow range above 1.1900 on Wednesday.
- January employment data from the US could trigger the next directional movement in the pair.
- The near-term technical outlook highlights a lack of bullish momentum.
EUR/USD trades in a narrow channel above 1.1900 in the European session on Wednesday after posting marginal losses on Tuesday. The January employment report from the United States (US) could ramp up market volatility in the second half of the day and trigger the next directional action in the pair.
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.86% | -0.78% | -2.73% | -1.16% | -1.51% | -0.84% | -1.42% | |
| EUR | 0.86% | 0.09% | -1.94% | -0.30% | -0.66% | 0.02% | -0.57% | |
| GBP | 0.78% | -0.09% | -1.72% | -0.40% | -0.75% | -0.07% | -0.66% | |
| JPY | 2.73% | 1.94% | 1.72% | 1.65% | 1.29% | 2.00% | 1.28% | |
| CAD | 1.16% | 0.30% | 0.40% | -1.65% | -0.25% | 0.34% | -0.26% | |
| AUD | 1.51% | 0.66% | 0.75% | -1.29% | 0.25% | 0.68% | 0.09% | |
| NZD | 0.84% | -0.02% | 0.07% | -2.00% | -0.34% | -0.68% | -0.59% | |
| CHF | 1.42% | 0.57% | 0.66% | -1.28% | 0.26% | -0.09% | 0.59% |
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 Dollar (USD) benefited from the cautious market stance on Tuesday and didn't allow EUR/USD to build on Monday's gains. However, disappointing December Retail Sales data from the US and falling US Treasury bond yields limited the USD's strength and helped the pair keep its footing in the second half of the day.
Nonfarm Payrolls (NFP) in the US are forecast to rise 70K in January and the Unemployment Rate is projected to remain unchanged at 4.4%. The US Bureau of Labor Statistics (BLS) will publish its annual benchmark revisions and update the birth-and-death model, which the BLS uses to estimate how many jobs were gained or lost due to companies opening or closing in a given month.
The immediate reaction to the labor market data is likely to be straightforward, with a positive surprise in the headline NFP print supporting the and vice versa. However, the underlying details of the report, with regards to benchmark revisions and to the model update, could trigger irregular movements.
In case the employment report shows that labor conditions continued to worsen to start the year, investors could reconsider the odds of a Federal Reserve (Fed) rate cut in March and cause the USD to come under heavy selling pressure. On the flip side, the USD could outperform its rivals if market participants remain convinced of a policy hold next March.
EUR/USD Technical Analysis:
In the 4-hour chart, EUR/USD trades at 1.1916. The 20-period Simple Moving Average (SMA) rises and sits above the 50 and 100 SMAs, with price holding north of the entire stack, including the 200 SMA. The 20-period SMA at 1.1875 offers nearby dynamic support. RSI (14) stands at 63, above the 50 midline, reinforcing bullish stance.
Measured from the 1.1590 low to the 1.2025 high, 38.2% Fibonacci retracement at 1.1859 aligns as a key support level ahead of the 50% retracement at 1.1808. Looking north, 1.1922 (Fibonacci 23.6% retracement) could be spotted as the immediate resistance level before 1.2000 (psychological level, static level) and 1.2030 (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.
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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.
