The EUR/USD currency pair remained relatively stable around the 1.1077 mark on Thursday morning, following a period of steady growth in the previous trading session. However, the pair is currently confined within a sideways channel, indicating a lack of clear direction. This cautious market sentiment can be attributed to investors holding back and conserving their energy in anticipation of significant employment data releases from the United States.
The day’s key economic event is the ADP private sector jobs report, which provides an initial insight into the health of the US labor market. While the ADP report does not directly correlate with Friday’s highly anticipated Nonfarm Payroll (NFP) report, it is considered a valuable indicator of overall market sentiment. Additionally, the market will closely monitor the release of weekly unemployment claims data, another important measure of employment trends. These releases are expected to influence the volatility of the EUR/USD pair as traders react to the information.
The Federal Reserve’s focus on employment indicators adds further significance to these releases, as they could play a crucial role in shaping the Fed’s monetary policy decisions. Robust employment data might support a modest 25 basis point interest rate cut by the Fed, while weaker labor market figures could increase the likelihood of a more substantial 50 basis point reduction.
Technical Analysis
Currently, the EUR/USD pair is consolidating around the 1.1065 level. There is potential for the market to test the 1.1107 level today, which is seen as a correction phase within the broader downtrend. Following this potential upward movement, a further decline to 1.1060 is anticipated. A break below this level could signal a continuation of the downward trend, potentially reaching 1.1016. The MACD indicator supports this bearish outlook, with its signal line below zero and pointing downwards.
On the H1 chart, EUR/USD continues to consolidate around the 1.1065 level. A slight dip to 1.1056 might occur, followed by an extension towards 1.1107 as part of a corrective pattern. Once this correction phase is completed, the downward trend is expected to resume. The Stochastic oscillator, currently just above 20, suggests a potential rise to 80, indicating room for short-term upward movement before continuing the broader bearish trend.
The spotlight will soon shift to Friday’s key employment metrics, including non-farm payrolls, the unemployment rate, and average hourly earnings for August. These indicators are pivotal for understanding the health of the US economy and influencing the Fed’s monetary policy decisions in the upcoming September meeting.
The upcoming releases of US employment data are expected to play a significant role in determining the direction of the EUR/USD pair in the coming days.
