The fall in EUR/USD has stopped: Markets seek stability ahead of employment statistics

RoboForex Analysis Department RoboForex

EUR/USD steadied at 1.1803 on Tuesday after a strong two-day fall. Support came from strong US macro data and the Fed's revised monetary policy expectations.

Statistics showed an unexpected expansion in US industrial activity, suggesting the economy and corporate profits remain resilient. Investor attention is shifting to Friday's report on the US labour market, but its publication may be delayed due to a partial government shutdown.

The dollar began rising on Friday after US President Donald Trump nominated Kevin Warsh to head the Fed, replacing Jerome Powell. The market perceives Warsh as a relatively more hawkish candidate. He allows for rate cuts, but at a less aggressive pace than other challengers.

Separately, Trump announced a trade deal with India that involves reciprocal tariff cuts in exchange for New Delhi halting Russian oil purchases.

Technical analysis

On the H4 chart, EUR/USD has entered a post-surge corrective phase after failing in the 1.2050-1.2100 area. The price rolled back to 1.1850-1.1870. It also holds above the previously broken 1.1830-1.1850 resistance, which remains a key support. Momentum weakens: Bollinger Bands stopped widening, MACD remains in positive territory, but the histogram shrinks. The correction is technical in nature; there are no signs of a trend reversal yet.

On H1, the correction forms a descending channel. The price stays below the Bollinger Bands' middle line, and the recovery remains sluggish. The Stochastic oscillator exited the oversold zone, allowing for a short-term rebound. However, as long as prices remain below the 1.1920-1.1950 zone, downward pressure persists. Holding the 1.1830 zone is critical to keeping the bullish scenario on higher timeframes.

Conclusion

In summary, the EUR/USD pair is undergoing a technical pause after a significant decline, finding temporary support near 1.1803. The stabilisation is largely driven by a recalibration of Fed expectations following a hawkish leadership nomination and robust US industrial data. While technical indicators suggest the current move is a correction within a larger uptrend, the immediate outlook remains cautious. The pair's near-term direction is highly contingent on holding the critical 1.1830 support. It will likely be dictated by the upcoming US labour market data, despite potential delays, which will serve as the next major catalyst for the dollar and the pair.

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RoboForex Analysis Department

RoboForex

RoboForex Analysis Department provides timely market insights, expert technical analysis, and actionable forecasts across forex, commodities, indices, and equities.

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