Bullish view
- Buy the EUR/USD pair and target the resistance at 1.1010.
- Add a stop-loss at 1.0927.
- Timeline: 1 day.
Bearish view
- Set a sell-stop at 1.0927 and a take-profit at 1.08340.
- Add a stop-loss at 1.1050.
The EUR/USD exchange rate drifted upwards after the US published relatively weak jobs numbers on Friday. It is slowly approaching the important resistance point at 1.100, a few points above last week’s low of 1.0837.
US inflation data ahead
The Bureau of Labor Statistics confirmed that the American labor market was easing on Friday. Its report revealed that the economy added over 209k jobs in July, lower than the median estimate of 230k.
The data was a big surprise since a separate report by ADP revealed that the economy added over 400k jobs in June. Also, the report was also notable since the bureau downgraded its May and April.
The jobs report had some bright spots as the unemployment rate dropped from 3.6% to 3.5% while wages continued rising. Therefore, there is a likelihood that the Federal Reserve will continue hiking interest rates in the coming months. Data from CME shows that analysts have a 93% chance of a rate hike this month.
This will be an important week for the EUR/USD pair since the US will publish the latest inflation data on Wednesday. Economists expect the data to reveal that the headline inflation continued falling in June. Precisely, they expect that inflation fell to 3.1% during the month.
Still, traders will be focusing on core inflation, which has remained stubbornly higher for a while. Estimates are that the headline CPI fell to 5.0% in June. A lower report than estimates will reduce the Fed’s pressure to continue hiking rates later this year.
There will be no major economic data from the US and Europe on Monday. The only events to watch will be speeches by Mary Daly, Loretta Mester, and Raphael Bostic.
EUR/USD forecast
The EUR/USD price erased all the losses made on Thursday after the soft US jobs report. It managed to flip the important resistance point at 1.0928 into a new support. The pair also jumped above the important 25-period and 50-period moving averages while the Relative Strength Index (RSI) has moved close to the overbought level.
Therefore, the outlook of the pair is bullish as buyers eye the crucial resistance point at 1.1010, the highest point in June. A move above that level will bring the next psychological resistance point at 1.1100 to view.
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