- The EUR/USD outlook indicates caution in the market ahead of pivotal US employment figures.
- Market participants are pricing a 97% chance of the Fed lowering borrowing costs this month.
- Fed officials are becoming more dovish while ECB policymakers are calling for steady rates.
The EUR/USD outlook indicates caution in the market ahead of pivotal US NFP data. Moreover, the dollar remains fragile after downbeat ADP jobs figures that led to a surge in Fed rate cut expectations.
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Market participants are awaiting crucial figures on private and non-farm employment that will shape the outlook for rate cuts. On Wednesday, job vacancies came in well below forecasts, indicating weaker demand in the labor market. The result was a decline in the dollar as bets on rate cuts rose.
Market participants are pricing a 97% chance of the Fed lowering borrowing costs this month. More downbeat figures might push traders to start pricing a 50-bps rate cut. Meanwhile, experts are predicting three rate cuts before the end of the year.
Economists expect the NFP report to show continued weakness in the labor market. Jobs could increase by 75,000 while the unemployment rate could jump to 4.3%. Softer figures would weigh on the dollar and increase the divergence in policies between the US and the Eurozone. Fed officials are becoming more dovish while ECB policymakers are calling for steady rates. The Eurozone economy is showing resilience despite US tariffs.
EUR/USD key events today
- US ADP non-farm employment change
- US unemployment claims
- US ISM services PMI
EUR/USD technical outlook: Price remains in tight consolidation
On the technical side, the EUR/USD price is respecting the 1.1600 support and the 1.1725 resistance levels in a sideways move. At the same time, it is chopping through the 30-SMA and the RSI through the pivotal 50 level.
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The consolidation followed a bullish impulsive move that pushed the price above the SMA, indicating a shift in sentiment. Therefore, there is a chance that bulls will return after the consolidation to make another impulsive leg.
However, within the range, the price trades below the SMA, a sign that bears are currently stronger. Therefore, it might retest the range support. A break below the level will allow EUR/USD to retest the 1.1400 support. However, if the support holds firm, bulls will return to retest the range resistance.
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