EUR/USD Forecast: Euro remains below key technical levels after NFP-inspired rebound
- EUR/USD trades in a tight channel below 1.1600 on Monday.
- The US Dollar came under heavy selling pressure after US employment data.
- The technical outlook highlights sellers' hesitancy in the near term.
After spending the majority of the previous week under heavy selling pressure, EUR/USD gathered bullish momentum on Friday and gained about 1.5% on a daily basis. The pair stays in a consolidation phase below 1.1600 in the European morning on Monday.
Euro PRICE Last 7 days
The table below shows the percentage change of Euro (EUR) against listed major currencies last 7 days. Euro was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.59% | 1.08% | -0.07% | 0.44% | 1.43% | 1.70% | 1.30% | |
| EUR | -1.59% | -0.53% | -1.61% | -1.14% | -0.16% | 0.10% | -0.29% | |
| GBP | -1.08% | 0.53% | -1.26% | -0.61% | 0.37% | 0.64% | 0.24% | |
| JPY | 0.07% | 1.61% | 1.26% | 0.52% | 1.47% | 1.77% | 1.53% | |
| CAD | -0.44% | 1.14% | 0.61% | -0.52% | 0.96% | 1.26% | 0.86% | |
| AUD | -1.43% | 0.16% | -0.37% | -1.47% | -0.96% | 0.26% | -0.13% | |
| NZD | -1.70% | -0.10% | -0.64% | -1.77% | -1.26% | -0.26% | -0.39% | |
| CHF | -1.30% | 0.29% | -0.24% | -1.53% | -0.86% | 0.13% | 0.39% |
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 dismal July employment report from the US triggered a US Dollar (USD) selloff ahead of the weekend, fuelling a rally in EUR/USD.
The US Bureau of Labor Statistics (BLS) announced that Nonfarm Payrolls (NFP) rose by 73,000 in July, missing analysts' estimate of 110,000. On a more concerning note, the BSL revised down May and June NFP increases by 125,000 and 133,000, respectively.
In response, US President Donald Trump fired BLS Chief Erika McEntarfer, accusing her of manipulating the numbers for political purposes.
According to the CME FedWatch Tool, the probability of a 25 basis points Federal Reserve (Fed) rate cut in September jumped above 70% from about 30% before the data, weighing on US Treasury bond yields and the USD.
June Factory Orders will be the only data featured in the US economic calendar on Monday, which is unlikely to trigger a market reaction.
Meanwhile, investors will pay close attention to political developments in the US. US President Donald Trump is expected to announce a replacement for Fed Governor Adriana Kugler, who decided to resign. Kugler's term was scheduled to end on January 31, 2026.
In case markets grown increasingly concerned about the Fed and the BLS losing independence, the USD could have a difficult time staying resilient against its rivals.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart holds above 50, highlighting sellers' hesitancy. However, EUR/USD remains below the 50-period, 100-period and the 200-period Simple Moving Averages (SMAs), suggesting that buyers are yet to be convinced of a steady rebound.
On the upside, 1.1630 (100-period SMA) aligns as the first resistance before 1.1650-1.1660 (Fibonacci 23.6% retracement, 200-period SMA) and 1.1700 (static level, round level). Looking south, support levels could be seen at 1.1540 (Fibonacci 38.2% retracement), 1.1500 (static level, round level) ad 1.1450 (Fibonacci 50% retracement).
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.
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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.
