Dovish Fed signals smashed the US Dollar across the board alongside the US Treasury bond yields, driving the EUR/USD pair back above the 1.0700 threshold. The focus now shifts to the US NFP report for a fresh directional move in the main currency pair.
A strong-than-expected NFP headline figure combined with hotter-than-expected wage inflation data could push back against expectations of a September Fed rate cut, lifting the US Dollar against the Euro back toward 1.0600. Conversely, if the US employment data strongly indicates loosening labor market conditions, the Greenback could see a fresh leg down on a potential confirmation of rate cuts this year. In such a case, EUR/USD could advance through the 1.0800 threshold.
Dhwani Mehta, Analyst at FXStreet, offers a brief technical outlook for EUR/USD:
“The EUR/USD pair is struggling at around the 21-day Simple Moving Average (SMA) at 1.0715, while the 14-day Relative Strength Index (RSI) sits beneath the 50 level, suggesting that downside risks remain in play.”
“Buyers need to find a strong foothold above 1.0800, the convergence of the 200-day and 50-day SMAs, to unleash further recovery. The next upside barrier for EUR/USD will then be seen at the 100-day SMA at 1.0842. Conversely, the initial demand area is seen at the April 16 low of 1.0619, below which the 1.0550 psychological level will be tested en route to the November 2023 low of 1.0517,” Dhwani adds
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