Bearish view
- Set a sell limit at 1.1075 and a take-profit at 1.0950.
- Add a stop-loss at 1.1135.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.1075 and a take-profit at 1.1150.
- Add a stop-loss at 1.1000.
The EUR/USD pair bounced back after the latest US non-farm payrolls (NFP) data showed that the labor market was softening. The pair bounced back to a high of 1.1040, which was much higher than last week’s low of 1.0910.
US NFP data
The EUR/USD pair rose modestly after the US published the latest jobs numbers and as worries of the credit rating downgrade eased. Data by the Bureau of Labor Statistics showed that the economy added over 187k jobs in July after it added 209k in the previous month.
Earlier numbers revealed that the number of vacancies in the US dropped to the lowest level in over two years. Manufacturing and services PMI numbers also revealed that output in the two sectors was falling.
On the positive side, data revealed that the unemployment rate sits at the lowest level in decades. Wage growth strengthened by 4.4%, which is higher than what the Fed wants.
These numbers came a week after the Federal Reserve delivered another interest rate hike. It hiked rates by 0.25% and pushed them to the highest level in more than 22 years. In its statement, the Fed maintained that it will be data-dependent going forward.
Therefore, these numbers mean that the Fed has a narrow path to continue hiking rates since core inflation is still above the 2% target rate. In a statement on Saturday, Fed’s Michele Bowman reiterated that the bank was inclined to deliver another rate increase.
The next key catalyst for the EUR/USD pair will be the upcoming statement by Fed’s James Harker and Bowman. Like Bowman, Harker will likely maintain a hawkish tone in his speech.
The pair will also react mildly to several important economic numbers from Europe, including German industrial production and Spanish consumer confidence.
EUR/USD technical analysis
The EUR/USD pair has made a strong bullish recovery since the US NFP data. On the 4H chart, the pair has moved to the important 38.2% Fibonacci Retracement level. It has moved slightly above the 25-period and 50-period moving averages while the MACD has drifted upwards.
The pair will likely continue rising as buyers target the crucial resistance at 1.1075, the highest point in May. It will then resume the bearish trend later this week, with the next important support being at 1.0912.
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