EUR/USD: Techs lean bearish ahead of US non-farm payrolls
- EUR/USD is on the defensive, having charted a bearish lower high at key trendline hurdle earlier this week.
- Recent lows near 1.10 will likely be put to test if the US wage growth tops forecasts.
EUR/USD will likely revisit the recent low of 1.1110, as suggested by technical charts, if the US non-farm payrolls and more importantly, the wage-price inflation, scheduled for release at 12:30 GMT today, blows past expectations.
The currency pair faced rejection at the trendline connecting March 20 and April 17 highs earlier this week after the Fed kept the interest rates unchanged and Chairman Powell pushed back expectations that the central bank's next move would be a rate cut by associating low inflation with transitory factors. Powell added further that the policymakers see no strong case for a move in either direction.
More importantly, EUR/USD closed well below 1.1187 on Thursday, validating the post-Fed sell-off. With a bearish lower high in place along the descending trendline, the path of least resistance appears to be on the downside.
The recent lows near 1.11, therefore, stand exposed and could be put to test if the US data surprises on the higher side. The Nonfarm Payroll figure is expected to show the economy added 185k jobs in April, following the addition of 196K jobs in March. Meanwhile, the average hourly earnings are forecasted to increase by 0.3% month-on-month in April, following a 0.1% rise in March.
An above-forecast wage growth data would force markets to scale back expectations of Fed rate cut in December, leading to a broad-based rally in the US Dollar.
Ahead of the Fed, the EUR/USD could take cues from German Bundesbank President Weidmann's speech (due at 08:00 GMT) and the preliminary Eurozone consumer price index for April, scheduled for release at 09:00 GMT.
Pivot points
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
