EUR/USD Price Forecast: Holds retracement near 1.1600 from immediate highs

EUR/USD trades almost flat around 1.1600 after correcting from the two-week high of 1.1656.
The US Dollar struggles to attract more bids as the US NFP takes centre stage.
Traders lose confidence that the Fed will cut interest rates in December.

Sagar Dua FXStreet

The EUR/USD pair trades calmly near 1.1600 during the late Asian trading session on Tuesday, following the corrective move from an over two-week high of 1.1656. The major currency pair strives to regain strength as the US Dollar (USD) struggles to extend two-day recovery move, with investors turning cautious ahead of the United States (US) Nonfarm Payrolls (NFP) data for September, releasing on Thursday.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally lower to near 99.45 The USD Index rebounded in last two trading days on receding expectations that the Federal Reserve (Fed) will cut interest rates again this year.

According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 3.50%-3.75% in the December meeting has diminished to 43% from 62.4% seen a week ago.

In the Eurozone, a majority of European Central Bank (ECB) officials have been expressing that interest rates should remain where they are as risks to inflation and economic growth are balanced.

EUR/USD continues to face selling pressure near the downward-sloping trendline plotted from the September 22 high of 1.1818. The major currency pair corrects to near the 20-day Exponential Moving Average (EMA), which is around 88.70.

The 14-day Relative Strength Index (RSI) wobbles inside the 40.00-60.00 range, indicating a sideways trend.

Looking down, the August low around 1.1400 and the June low of 1.1347 will be key support zones for the pair in case the pair slides below the October 9 low of 1.1542.

On the upside, the pair could rise towards the round-level figure of 1.1700 and the October 17 high of 1.1728 if its breaks above the two-week high of 1.1656.

EUR/USD daily chart

Economic Indicator

Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Why it matters to traders?

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

AUD/USD sits near a one-month top, above 0.7000 amid fresh USD selling

AUD/USD holds above 0.7000 through the Asian session, trading near a one-month high touched earlier this Monday amid renewed US Dollar selling. US bond yields decline further amid a modest pullback in crude oil prices, capping the USD recovery from a three-week low. Moreover, bets for a November RBA rate hike support the Aussie, though upside seems capped ahead of the crucial two-day FOMC meeting, starting Tuesday.

USD/JPY struggles below 157.00 on weak USD; holds above one-month low ahead of Fed, BoJ meetings

USD/JPY attracts fresh sellers during the Asian session on Monday, stalling its recovery from the lowest level since September 18, touched Friday as a further decline in US bond yields weighs on the US Dollar. Meanwhile, the Japanese Yen benefits from a more hawkish BoJ, further weighing on the currency pair. The downside, however, seems limited as traders keenly await Fed and BoJ policy meetings later this week.

Gold sticks to modest recovery gains above $4,000 as Fed hike bets cap upside

Gold stages a modest recovery from the vicinity of a three-month low, trading above the $4,000 psychological mark through Monday’s Asian session amid a softer US Dollar. US President Donald Trump has ruled out immediate military action against Iran, triggering a modest pullback in crude oil prices. Furthermore, Federal Reserve officials have signaled no urgency to raise interest rates immediately.

Cardano's derivatives and on-chain data confirm bears in control

Cardano extends losses, trading below $0.202 after three consecutive weeks of more than 20% declines since early October. Selling pressure continues to build as weakening derivatives metrics, bearish on-chain signals and a deteriorating technical outlook point to further downside risks. Derivatives data shows a bearish bias for Cardano.

Flight to safety meets a high earnings bar as central bank week begins

Treasuries rallied again, equities are struggling, and central banks and earnings are on the horizon. Last week, US Treasuries rallied for a second consecutive week. This pushed 10s and 30s to 5% and 5.33%, respectively, flattening the curve even as Brent crude rallied about 7% to within striking distance of March peaks at US$119.50, and tech stocks posted a second straight week of losses.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.