|

EUR/USD Forecast: Euro could extend slide with a drop below 1.0760

  • EUR/USD has gone into a consolidation phase below 1.0800.
  • US Dollar preserves its strength following the NFP-inspired rally.
  • 1.0760 aligns as key near-term technical support for the pair. 

Following the sharp decline witnessed in the second half of the previous week, EUR/USD seems to have gone into a consolidation phase slightly below 1.0800 early Monday. The pair's near-term technical outlook points to a bearish tilt and 1.0760 aligns as critical support.

The impressive January jobs report from the US revealed on Friday and Nonfarm Payrolls rose by 571,000. This reading beat the market expectation of 185,000 by a wide margin and provided a boost to the US Dollar. Further details of the publication revealed that the annual wage inflation, as measured by Average Hourly Earnings, declined to 4.4%. However, December's print of 4.6% got revised higher to 4.9%, not allowing the soft wage inflation reading for January to have a negative impact on the US Dollar's valuation.

Early Monday, US stock index futures trade in negative territory. In the absence of high-impact data releases, the US Dollar could preserve its strength against its rivals in case Wall Street's main indexes continue to push lower after the opening bell.

The European economic docket will feature Retail Sales data for January, which is forecast to show a 2.5% decline on a monthly basis. Earlier in the session, the data from Germany showed that Factory Orders rose by 3.2% in December, compared to analysts' estimate of 2%, but failed to help the Euro gain its footing.

Finally, European Central Bank President Christine Lagarde will be delivering a speech at 1800 GMT. If Lagarde reminds markets that they are unlikely to end the tightening cycle after one more 50 basis points increase in key rates in March, EUR/USD's losses could remain limited.

EUR/USD Technical Analysis

The Relative Strength Index on the four-hour chart stays well below 40, suggesting that there is some room on the downside before EUR/USD turns technically oversold. 

On the downside, 1.0760 (200-period Simple Moving Average (SMA), Fibonacci 50% retracement of the latest uptrend) aligns as key support. In case EUR/USD falls below that level and starts using it as resistance, it could push lower toward 1.0730 (static level) and 1.0700 (psychological level, Fibonacci 61.8% retracement).

Interim resistance aligns at 1.0800 (psychological level, static level) before 1.0820 (Fibonacci 38.2% retracement). A four-hour close below the latter could discourage sellers and open the door for a recovery toward 1.0860, where the 100-period SMA is located. 

Author

Eren Sengezer

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.

More from Eren Sengezer
Share:

Editor's Picks

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading 

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.