EUR/USD hold gains amid Fed cut hopes with further US Jobs data on tap

EUR/USD is trading with moderate gains, right above 1.1750 at the time of writing on Thursday, but still trapped within a tight range below 1.1760. Rising bets of back-to-back Federal Reserve (Fed ) interest rate cuts have offset the impact of an unexpected increase in the Eurozone's unemployment rate. The Focus now is on the US Challenger Job Cuts.

Data released by Eurostat earlier on Thursday revealed that the rate of unemployed workers in the countries sharing the Euro rose to 6.3% in August, up from July's 6.2% and against market expectations of a seady 6.2% reading.

The Euro, however, has remained little changed following the release. The common currency remains buoyed by US Dollar's weakness, after the US ADP Employment Change showed an unexpected decline in September, adding pressure on the Fed to lower interest rates further over the upcoming months.

With the US government closed amid a budget standoff, the Labor Department will not release the US jobless payrolls report, and, most likely, neither Friday's key Nonfarm Payrolls. In this context, the US Challenger lay-offs, due later on the day, could gather particular interest.

Daily digest market movers: Concerns about US labor market are underpinning the Euro

• The Euro Dollar remains trading within a 50-pip range above 1.1710. Recent Eurozone data have not been particularly supportive, but the rising bets of Fed rate cuts, following weak employment data released earlier this week, are keeping the US Dollar on the defensive.
• The Governour of the Bank of Latvia and ECB committee member, Martins Khazaks, reiterated that the bank's interest rates are at a "very appropriate level" and that they should remain unchanged unless further shocks occur.
• On Wednesday, the US Supreme Court dismissed US President Donald Trump's order to fire Federal Reserve Governor Lisa Cook and allowed her to remain in her position at least until January, when the court is expected to hear Trump's arguments. This sentence backs the Fed's independence and represents a significant setback to the president's attempts to control the central bank.
• US economic data, however, continues to point to further monetary easing. Wednesday's ADP employment report revealed a net loss of 32K jobs in September, against expectations of a 50K increase. Beyond that, August reading was revised to a 3K decline from the 54K rise previously estimated, adding to evidence that the US labor market is deteriorating sharply.
• September's US ISM Manufacturing Purchasing Managers Index showed that business activity improved to 49.1 from 48.7 in August. The final data beat estimates of a 49.0 reading, but new orders declined to 48.9 from 51.4, and employment contracted at a 45.3 level, easing the optimism about the headline reading.
• Recent data and the US government shutdown have prompted traders to increase their bets on immediate Fed rate cuts. Chances of a quarter-point easing in October are practically fully priced, with a 99% chance according to the CME Group's FedWatch tool, while the odds for another such cut in December have increased to 86%, from 60% one week ago.
• In Europe, September's preliminary Harmonized Index of Consumer Prices (HICP) confirmed expectations of an acceleration to a 2.2% year-on-year rate, from 2% in August, while the core reading continued to grow at a steady 2.3% yearly rate.

Technical Analysis: EUR/USD resistances at 1.1760 and 1.1795 keep holding bulls

EUR/USD immediate bias remains bullish, but technical indicators point to a weakening momentum, as bulls remain capped below the broken trendline. The 4-hour chart Relative Strength Index (RSI) at 55 is close to the 50 neutral level, and the Moving Average Convergence Divergence (MACD) is crossing below the signal line.

Bulls were rejected at the 1.1780 area on Wednesday, a few pips below the mentioned reverse trendline, now around 1.1795. A successful break of that level is needed to cancel the broader bearish trend from mid-September highs and shift the focus towards the September 23 and 24 highs, near 1.1820.

To the downside, immediate support is at the 1.1710-1.1715 area, which contained bears on Tuesday and Wednesday. Further down, last week's lows at the 1.1645-1.1655 area and the September 2 and 3 lows, near 1.1610, would come into focus.