EUR/USD Price Forecast: Approaches 1.1400 as bearish flag remains in play
- EUR/USD attracts some buyers and moves away from the weekly low.
- The upside seems limited as traders keenly await the US NFP report.
- The bearish setup backs the case for the emergence of fresh sellers.
The EUR/USD pair ticks higher during the Asian session on Thursday, though it lacks bullish conviction as traders keenly await the release of the crucial US Nonfarm Payrolls (NFP) report. Spot prices currently trade around the 1.1385 area and remain close to the weekly low, touched on Wednesday.
From a technical perspective, the EUR/USD pair retains a negative near-term bias beneath the 200-period Exponential Moving Average (EMA) on the 4-hour chart. Adding to this, the recent recovery from the lowest level since May 2025 has been along an upward-sloping channel, which constitutes the formation of a bearish flag pattern.
Moreover, the Relative Strength Index (14) near 42.5 and a slightly negative Moving Average Convergence Divergence (MACD) reading hint at fading bullish momentum. Momentum indicators together reinforce the near-term bearish outlook and suggest that the path of least resistance for the EUR/USD pair remains to the downside.
The EUR/USD pair holds just above the lower boundary of the rising parallel channel at 1.1366. This, however, points to only a tentative structural support, and a convincing break below would open the way for a slide. Spot prices might then aim towards retesting the year-to-date trough, around the 1.1335-1.1330 region, touched in June.
On the topside, initial resistance aligns with the upper edge of the upward parallel channel at 1.1451, ahead of stronger supply at the 200-period EMA clustered around 1.1522. The EUR/USD pair would need to reclaim the said barriers to ease the broader bearish tone and shift the technical picture toward a more constructive outlook.
(The technical analysis of this story was written with the help of an AI tool.)
EUR/USD 4-hour chart
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.
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
