Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1500.
Add a stop-loss at 1.1655.
Timeframe: 1-2 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1655.
Add a stop-loss at 1.1500.
The EUR/USD exchange rate remained on edge after a report showed that the US labor market is struggling. It also consolidated as traders waited for the upcoming US nonfarm payrolls (NFP) numbers. It was trading at 1.1593, a few pips below last month’s high of 1.1710.
US Nonfarm Payrolls Data Ahead
The EUR/USD pair wavered after ADP published the latest private payrolls report on Wednesday. This report showed that the private sector created just 38,000 jobs, down sharply from the 48k it created in July. The increase was worse than the expected 47k.
These numbers came two days before the US publishes the official nonfarm payrolls (NFP) data. These numbers will provide more information on what happened in August. The last report showed that the economy lost 23k jobs in July this year.
These numbers will help to determine whether the Federal Reserve will hike interest rates. In a statement at the Jackson Hole Symposium, Kevin Warsh, the Fed Chair, noted that the bank was still concerned about inflation. As a result, CME, Polymarket, and Kalshi data show that the Fed may decide to hike interest rates as soon as this month.
The same is happening in Europe, where the European Central Bank (ECB) is expected to hike interest rates this month. A report that came out on Tuesday showed that European’s consumer inflation rose from 2.9% in July to 3.3% in August, while the core CPI slowed slightly to 2.4%.
These numbers, like in the United States, are above the 2% target set by the ECB and the Federal Reserve. With diesel prices rising, chances are that inflation will remain at an elevated level.
The next key European and US data to watch will be the latest European and US services and composite PMI numbers.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair has remained under pressure in the past few days. It has dropped from a high of 1.1711, its highest point on August 21st.
The pair remains below the descending trendline that links the highest swings on February 10, April 17, and August 20th. That is a sign that the pair is finding substantial resistance.
The pair is slowly forming a bearish flag pattern, a common bearish continuation sign in technical analysis. As such, there is a risk that the pair will drop to the key support level of 1.1500.
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