EUR/USD Forecast: Euro consolidates weekly gains as focus shifts to US NFP data
- EUR/USD holds steady at around 1.1800 in the European session on Thursday.
- Nonfarm Payrolls in the US are forecast to rise by 110,000 in June.
- The pair could face a stiff resistance level at 1.1840.
EUR/USD stabilizes near 1.1800 in the European session on Thursday after closing virtually unchanged on Wednesday. The June employment report from the US could trigger the next big 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 British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.59% | 0.33% | -0.39% | -0.74% | -0.64% | -0.40% | -0.85% | |
| EUR | 0.59% | 0.88% | 0.24% | -0.17% | -0.08% | 0.19% | -0.27% | |
| GBP | -0.33% | -0.88% | -0.85% | -1.04% | -0.95% | -0.71% | -1.16% | |
| JPY | 0.39% | -0.24% | 0.85% | -0.37% | -0.22% | 0.01% | -0.44% | |
| CAD | 0.74% | 0.17% | 1.04% | 0.37% | 0.05% | 0.34% | -0.12% | |
| AUD | 0.64% | 0.08% | 0.95% | 0.22% | -0.05% | 0.25% | -0.21% | |
| NZD | 0.40% | -0.19% | 0.71% | -0.01% | -0.34% | -0.25% | -0.45% | |
| CHF | 0.85% | 0.27% | 1.16% | 0.44% | 0.12% | 0.21% | 0.45% |
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) staged a rebound in the European session on Wednesday and caused EUR/USD to stretch lower. However, the USD lost its strength in the second half of the day and helped the pair erase its daily losses.
The data published by Automatic Data Processing (ADP) showed that employment in the private sector declined by 33,000 in June. This reading came in much worse than the market expectation for an increase of 95,000 and made it difficult for the USD to stay resilient against its peers.
Because financial markets in the US will remain closed in observance of the July 4 holiday on Friday, the US Bureau of Labor Statistics will publish the official labor market data on Thursday.
Nonfarm Payrolls in the US are to rise by 110,000 in June following the 139,000 increase recorded in May. A significant negative surprise, with a print below 80,000, could revive expectations for a Federal Reserve (Fed) rate cut in July and trigger a USD selloff, opening the door for a leg higher in EUR/USD. On the other hand, a reading at or above May's figure could support the USD with the immediate reaction.
EUR/USD Technical Analysis
EUR/USD remains in the upper half of the ascending regression channel and the Relative Strength Index (RSI) indicator on the 4-hour chart stays near 60, suggesting that the bullish bias remains intact in the near term but lacks momentum for now.
On the upside, 1.1840 (upper limit of the ascending channel) aligns as the next resistance level before 1.1900 (static level, round level). Looking south, support levels could be spotted at 1.1740 (mid-point of the ascending channel), 1.1700 (50-period Simple Moving Average) and 1.1630 (lower limit of the ascending channel).
Euro FAQs
The Euro is the currency for the 19 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.
