EUR/USD Faces Pressure Amidst Key US Employment Data Release
The EUR/USD is currently trading tentatively around the 1.0845 mark, with traders eagerly awaiting the significant US employment figures set to be announced early Friday. This cautious approach follows the currency pair’s most significant decline in the last five weeks.
In context, the Eurozone reported generally favorable inflation figures recently. However, a closer examination of four-month trends suggests a deviation from the European Central Bank (ECB) officials’ bullish inclinations. Specifically, the ECB’s favored inflation measure, the Harmonized Index of Consumer Prices (HICP), showed a monthly rise of 0.6%, outperforming the anticipated decline of 0.1%. On a yearly basis, the reading equaled the earlier reported 5.3% figure, slightly exceeding market predictions of 5.1%. Financial institution ANZ noted a deceleration, highlighting that the core HICP’s average monthly growth over the past four months has been 0.2%, compared to 0.6% during the year’s initial four months.
Additionally, July’s retail sales data from Germany disappointed, with monthly figures reprinting at -0.8% against market expectations of a 0.3% increase. The yearly figures further accentuated this downturn, recording a -2.2% compared to the predicted -1.0%. Such data, in combination with the ECB Meeting Accounts, dampened any anticipatory sentiments regarding potential deviations from the ECB, further influencing the EUR/USD dynamics.
Across the Atlantic, the US inflation metric, the Core Personal Consumption Expenditure (PCE) Price Index for August, aligned with market predictions, displaying 4.2% YoY and 0.2% MoM, marginally outpacing previous statistics. The Initial Jobless Claims showed a decrease to 228K, surpassing the projected 235K, while the Chicago Purchasing Managers’ Index exhibited an uptick, and Personal Spending in July surpassed expectations.
Despite these economic developments, the US 10-year and two-year Treasury bond yields remain subdued, mirroring levels from three weeks ago, while the US stock futures show inconsistency following a varied Wall Street closure. As it stands, the bearish momentum surrounding the EUR/USD could persist, contingent on forthcoming US NFP and Unemployment Rate disclosures.
EUR/USD Technical Analysis:
The EUR/USD recently breached the 1.0880 threshold, registering a close below it, thereby reverting to the predominant bearish trajectory depicted in its chart. This sets the stage for potential further declines, targeting 1.0785 as an interim goal. A breach of this level could steer the pair towards the 1.0700 benchmark. Given the EMA50’s adverse pressure, a bearish inclination remains the day’s forecast. However, a surpass of 1.0880 could negate this outlook, pivoting the currency pair towards a recovery. Today’s projected trading bracket is between 1.0750 (support) and 1.0900 (resistance), with an overall bearish trend expected.
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