EUR/USD caught a bid on Wednesday, rebounding from recent lows and finding support around 1.1050, but the pair remains constrained below the critical 1.1100 level. Traders are now eyeing upcoming U.S. jobs data, with Friday’s Nonfarm Payrolls (NFP) report expected to play a pivotal role in setting the tone for market expectations.
While the euro showed some strength midweek, the focus remains firmly on U.S. economic indicators. This week's sole significant data release from the Eurozone, the European Retail Sales figures, is scheduled for early Thursday. Retail sales in the EU are anticipated to show a modest recovery, with a year-on-year growth of 0.1% in July compared to the previous -0.3% contraction.
In the U.S., the latest data has added to market uncertainty. July’s JOLTS Job Openings fell short, with 7.673 million jobs reported versus the expected 8.1 million, down from June’s revised 7.91 million. This miss has intensified speculation around the Federal Reserve’s next move, with a growing number of traders betting on a 50 basis points rate cut at the Fed's September 18 meeting. While rate markets are pricing in a total of 100 basis points in cuts by the end of 2024, there remains a 57% probability of a smaller 25 basis points cut this month, according to CME’s FedWatch Tool.
Friday's Nonfarm Payrolls report looms large, representing the last key piece of U.S. labor market data before the Fed's potential rate cut. Investors will be closely watching the NFP figures, which are expected to dictate the scale of the Fed's easing measures and confirm the start of a new rate-cutting cycle.
Despite the recent uptick, EUR/USD remains trapped within near-term technical resistance levels. Buyers have stepped in to stabilize the pair, which last week reached a 13-month high just above 1.1200. However, a pullback in demand for the dollar has seen bids scrambling to maintain a bullish stance on the charts.
Technically, the euro still trades comfortably above the 200-day Exponential Moving Average (EMA) at 1.0845, keeping it in bullish territory. However, the pair faces headwinds from a potential bearish pullback, as short positions gather around the 50-day EMA at 1.0956, posing a challenge to a sustained recovery above the 1.1100 mark.
With key economic data and Fed decisions on the horizon, EUR/USD is poised for potential volatility. Traders are positioning cautiously, waiting for clearer signals from Friday’s NFP report and the Fed's subsequent moves, which could set the course for the euro in the weeks to come.
