EUR/USD Forecast: Euro holds ground ahead of US data, Powell testimony

EUR/USD stays above 1.0850 in the European morning on Wednesday.
Employment-related data from the US and Fed Chairman Powell's testimony could impact USD valuation.
Next key resistance for the pair is located at 1.0900-1.0910.

Eren Sengezer FXStreet

EUR/USD trades in a tight channel above 1.0850 in the European morning on Wednesday as investors move to the sidelines ahead of key macroeconomic events.

Although EUR/USD edged higher during the European trading hours on Tuesday, it failed to gather bullish momentum in the second half of the day as the US Dollar (USD) benefited from the souring market mood.

Euro price today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Swiss Franc.

	USD	EUR	GBP	CAD	AUD	JPY	NZD	CHF
USD		-0.04%	0.00%	-0.06%	-0.19%	-0.10%	-0.07%	0.04%
EUR	0.04%		0.04%	-0.02%	-0.14%	-0.05%	-0.02%	0.08%
GBP	0.00%	-0.04%		-0.05%	-0.18%	-0.08%	-0.06%	0.09%
CAD	0.05%	0.02%	0.04%		-0.14%	-0.05%	-0.02%	0.09%
AUD	0.20%	0.17%	0.20%	0.13%		0.10%	0.13%	0.26%
JPY	0.09%	0.05%	0.07%	0.04%	-0.09%		0.02%	0.14%
NZD	0.07%	0.04%	0.06%	0.02%	-0.11%	-0.03%		0.16%
CHF	-0.08%	-0.12%	-0.08%	-0.14%	-0.26%	-0.17%	-0.14%

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 Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

The ADP will release the private sector employment data in the early American session on Wednesday. Markets expect ADP Employment Change to come in at 150,000 in February, up from 107,000 in January. Later in the session, January JOLTS Job Openings data will also be featured in the US economic docket. In case employment-related data highlight tight labor market conditions, the USD could gather strength with the immediate reaction. Market participants, however, could refrain from taking large positions ahead of Federal Reserve (Fed) Chairman Jerome Powell's testimony before the House Financial Services Committee.

Markets are currently pricing in a 70% probability that the Fed will lower the policy rate in June. In case Powell acknowledges weakness in recent data and confirms a policy pivot in June, the market positioning suggests that there is room for further USD weakness in the near term.

On the other hand, the USD could gather strength against its rivals if Powell adopts a cautious tone on inflation outlook and reiterates data-dependent approach without hinting at the possible timing of a rate cut.

EUR/USD Technical Analysis

EUR/USD holds slightly above 1.0860, where the Fibonacci 38.2% retracement of the latest downtrend is located. In case this level is confirmed as support, 1.0900-1.0910 (psychological level, Fibonacci 50% retracement) could act as stiff resistance before 1.0940 (static level).

On the downside, the 200-period Simple Moving Average (SMA) on the 4-hour chart aligns as first support at 1.0825 ahead of 1.0800 (100-period SMA; Fibonacci 23.6% retracement) and 1.0760 (static level).

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.

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