EUR/USD Breakout in Focus—CPI and Jobs Data Stir the Pot

EUR/USD bounced back above $1.1300 in Friday’s Asian session, ending a 3 day losing streak that had taken EUR/USD to a 2 week low of $1.1265. The small bounce is a pause in the bearish momentum as traders wait for the key inflation data from Eurozone and US Non-Farm Payrolls (NFP) report.

But the euro remains fragile. The ECB recently flagged downside risks to inflation and markets are pricing in a 25bps rate cut as early as July. If Friday’s Eurozone CPI Flash Estimate disappoints, the near term cut expectations may solidify and put pressure on the currency.

US Jobs Report in Focus for Dollar

Across the Atlantic, attention turns to the US April jobs report. Markets are expecting a sharp slowdown in hiring, 138,000 jobs vs 228,000 in March. Unemployment rate is seen at 4.2% and average hourly earnings 0.3% mom.

Adding to the dovish tone, US GDP data showed a surprise contraction. Traders are now pricing in up to 4 rate cuts by end of 2025. But a strong NFP print could challenge those expectations, boost the dollar and push EUR/USD lower.

Technical View: $1.1348 in Focus

EUR/USD is at a key technical juncture. The pair is consolidating at $1.1304 just below the trendline from April 22 which intersects with the 50 period EMA at $1.1339. Momentum is flat near the zero line – a sign of impending volatility.

🔹 Trade Setup:

• Buy Entry: On break above $1.1348 with strong confirmation

• Upside Targets: $1.1389, then $1.1424

• Stop-Loss: Below $1.1265 to guard against false moves

Tip: Wait for a confirmed close above the trendline to avoid fakeouts. The coming data could be a breakout catalyst – or a trap.

Conclusion: Volatility Returns to EUR/USD

Data heavy day ahead for EUR/USD. Will it break out or pull back? Depends on how markets react to the inflation and labor market data and what it means for the ECB and Fed rate hikes.

One thing is for sure – with macro in play, volatility is back and EUR/USD is the chart to watch.