EUR/USD holds firm as upcoming data threatens the Dollar

The EUR/USD pair advanced for a third consecutive session on Tuesday, climbing towards 1.1772 USD. Growing concerns about a cooling US labour market are reinforcing expectations of a Federal Reserve rate cut, weighing on the dollar.

Investors are particularly focused on the upcoming revised employment data for the period from April 2024 to March 2025. Estimates suggest a possible downward revision of up to 800,000 jobs, which could indicate that the Fed is falling short of its full employment mandate – a key factor in its policy decisions.

Market attention is also turning to two key inflation releases this week: the Producer Price Index (PPI) on Wednesday and the Consumer Price Index (CPI) on Thursday.

Interest rate futures currently price in an 89% probability of a 25-basis-point cut at next week’s Fed meeting. Some participants are even pricing in the possibility of a more aggressive 50-basis-point reduction.

Technical analysis: EUR/USD

Four-hour chart

On the H4 chart, EUR/USD has extended its upward move towards 1.1810 USD. A decisive break above this resistance could signal a continuation of the uptrend. Alternatively, a rejection at this level may lead to a corrective pullback, retesting the former resistance – now acting as support around 1.1720–1.1740 USD. The MACD indicator supports this outlook: both the histogram and signal line remain above zero and are rising, suggesting bullish momentum. The primary scenario favours further gains toward 1.1810 USD, followed by 1.1870 USD, though minor corrections may occur along the way.

One-hour chart

On the H1 chart, the pair is testing resistance and showing signs of short-term consolidation. A break above 1.1772 USD would likely confirm a continuation of the upward move. The Stochastic oscillator is testing the 50 level, indicating potential for a brief correction before the next leg higher. The near-term upside target remains 1.1810 USD.

Conclusion

The euro remains well-supported against the dollar as markets anticipate softer US labour data and key inflation prints this week. A confirmation of weaker employment figures or subdued inflation could further solidify expectations for Fed easing, likely propelling EUR/USD toward higher resistance levels. Technically, the pair retains bullish momentum, though a near-term correction remains possible.