EUR/USD Price Forecast: Holds above 1.1700; Iran tensions cap gains as US NFP looms

EUR/USD edges higher on Friday as US-Iran peace deal hopes undermined the safe-haven USD.
The uptick lacks bullish conviction as traders keenly await the release of the key US NFP report.
The mixed technical setup further warrants caution before positioning for any further move up.

Haresh Menghani FXStreet

The EUR/USD pair trades with a mild positive bias around the 1.1730-1.1735 region during the Asian session on Friday and, for now, seems to have stalled the previous day's modest slide. The uptick, however, lacks bullish conviction as the uncertainty over a US-Iran peace deal acts as a tailwind for the US Dollar (USD) and caps spot prices as traders keenly await the closely-watched US employment details.

The popularly known Nonfarm Payrolls (NFP) report might influence market expectations about the US Federal Reserve's (Fed) policy outlook and drive the USD demand. In the meantime, renewed hostilities in the Strait of Hormuz keep a lid on the latest optimism over the de-escalation of the US-Iran conflict and underpin the USD's reserve currency status. This, in turn, is holding back the EUR/USD bulls from placing fresh bets.

The recent move up witnessed over the past two weeks or so has been confined to an ascending channel. Furthermore, the EUR/USD pair is holding above the 200-period Simple Moving Average (SMA) on the 4-hour chart, reaffirming a constructive near-term bias while the bullish structure remains intact. However, the Relative Strength Index (RSI) hovers just below 50, hinting at consolidative rather than overextended conditions.

Adding to this, the latest Moving Average Convergence Divergence (MACD) reading has slipped marginally negative, which signals waning upside momentum even as price action stays underpinned by trend support. Hence, any subsequent move up might continue to confront initial resistance aligned with the upper boundary of the trend channel near 1.1802. A decisive break above would open the way for a stronger bullish extension.

On the downside, immediate support is found at the recent price pivot around 1.1730, followed by the lower parallel boundary at 1.1693. A sustained drop through that zone would expose the 200-period SMA at 1.1670 as the next key layer of demand and risk a deeper corrective phase inside the channel structure.

(The technical analysis of this story was written with the help of an AI tool.)

EUR/USD 4-hour chart

Nonfarm Payrolls FAQs

What are Nonfarm Payrolls?

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.

How does Nonfarm Payrolls influence the Federal Reserve monetary policy decisions?

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.

How does Nonfarm Payrolls affect the US Dollar?

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.

How does Nonfarm Payrolls affect Gold?

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.

Sometimes Nonfarm Payrolls trigger an opposite reaction than what the market expects. Why is that?

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.

GBP/USD remains in two-day highs around 1.3260

GBP/USD adds to Friday’s bounce, gathering fresh traction and flirting with the 1.3270 zone on Monday, or two-day tops. Cable’s decent advance comes despite the move higher in the Greenback and investors’ assessing of UK PM K. Starmer's resignation.

EUR/USD remains close to three-month lows near 1.1450

EUR/USD sets aside Friday’s bounce and trades with modest losses in the mid-1.1400s at the beginning of the week. The continuation of the bid bias in the US Dollar continues to weigh on spot despite improving sentiment from the geopolitical front.

Gold bounces off lows, looks to surpass $4,200

Gold regains composure and leaves behind three-consecutive daily declines on Monday, looking to regain the area above the $4,200 mark per troy ounce. Reports of progress in the latest round of US-Iran talks are helping the precious metal maintain its footing at the start of the week, although the stronger Greenback seems to limit the upside potential for now.

Breaking: Iran closes the Strait of Hormuz amid ceasefire deal violation

Iran says it is closing the Strait of Hormuz after accusing the United States (US) and Israel of violating the ceasefire. According to Iran, the decision came over the continued Israeli strikes in Lebanon. The Iranian Revolutionary Guard Corps Navy issued a warning to all vessels: "Do not approach the Strait of Hormuz; otherwise, your security will be jeopardized."

Is Shiba Inu dead or just in a crisis? The data behind SHIB's 95% crash

SHIB, the dog-themed meme coin that became one of the biggest success stories in crypto and turned early buyers into crypto millionaires, is facing tough times. Its price has fallen more than 32% so far this year, and it is down 95% from its all-time high in 2021. Is SHIB simply another fading meme coin, or is the market overlooking a possible recovery story?

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.