- The US Dollar slides across the board after the FOMC meeting and US data; attention turns to NFP.
- Despite the current slide, fundamentals still favor the Dollar.
- EUR/USD is testing a key resistance area; a break above 1.0670 could open the door to 1.0700.
The EUR/USD rose on Thursday boosted by a weaker US Dollar, but it could not break a key resistance level and lost strength. After the FOMC meeting and US economic data, market focus turns to the Nonfarm Payrolls report.
Data from the US on Thursday showed a softening labor market and a decline in the Unit Labor Cost index during the third quarter. These figures reinforce the perception that the Federal Reserve (Fed) has finished raising interest rates. This expectation has led to a decline in Treasury yields and boosted equity prices on Wall Street.
On Friday, the US will report the official employment report. The expectation is for an increase in payrolls by 180,000. Such a figure would suggest a healthy, balanced labor market. However, it would not change the expectation that the Fed is done with rate hikes. It would take another significant positive surprise to put the odds of another rate hike back on the table. A number reinforcing the "larger for longer" mantra could support the Dollar.
The current upward move in EUR/USD is occurring within a gradual correction, as the fundamentals still favor the US over the Euro area. If market sentiment deteriorates, bears will likely regain control.
EUR/USD short-term technical outlook
-638345516534575856.png)
On the daily chart, the pair is on the verge of posting its second-highest daily close in over a month, above 1.0600. However, the upside remains limited by the 55-day Simple Moving Average (SMA), which stands at 1.0664. A daily close above this level would strengthen the outlook for the Euro, while staying below that area suggests that further gains may be limited. On the downside, a daily close below 1.0506 could indicate that the correction is over, favoring consolidation ahead with a downside bias.
On the 4-hour chart, technical indicators show the Euro losing strength, with the Relative Strength Index (RSI) flattening and Momentum turning south. While above 1.0590, the pair could rise to test the critical downtrend line at 1.0665. However, a decline below this level would open the door to more losses, with a target of 1.0560. The 1.0520 zone is the vital support level.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD drops to two-year lows below 1.0400 after weak PMI data
EUR/USD stays under bearish pressure and trades at its weakest level in nearly two years below 1.0400. The data from Germany and the Eurozone showed that the business activity in the private sector contracted in early November, weighing on the Euro.
GBP/USD falls to six-month lows below 1.2600, eyes on key data releases
GBP/USD extends its losses for the third successive session and trades at a fresh fix-month low below 1.2600. This downside is attributed to the stronger US Dollar (USD) as traders continue to evaluate the Fed's policy outlook following latest data releases and Fedspeak.
Gold price refreshes two-week high, looks to build on momentum beyond $2,700 mark
Gold price hits a fresh two-week top during the first half of the European session on Friday, with bulls now looking to build on the momentum further beyond the $2,700 mark. This marks the fifth successive day of a positive move and is fueled by the global flight to safety amid persistent geopolitical tensions stemming from the intensifying Russia-Ukraine war.
Ripple surges to a new yearly high; XRP bulls aim for three-year high of $1.96
Ripple extends its gains by around 10% on Friday, reaching a new year-to-date high of $1.43 and hitting levels not seen since mid-May 2021. The main reasons behind the rally are the announcement that the US SEC's Chair Gary Gensler will resign and the launch in Europe of an XRP ETP by asset management company WisdomTree.
A new horizon: The economic outlook in a new leadership and policy era
The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.