Bullish View
Buy the EUR/USD and add a take-profit at 1.1400.
Add a stop-loss at 1.1250.
Timeline: 1-2 days.
Bearish View
Set a sell-stop at 1.1280 and a take-profit at 1.1200.
Add a stop-loss at 1.1350.
The EUR/USD pair wavered on Monday morning as the market continued to react to the latest American jobs numbers. The pair is trading at 1.1310, where it has been in the past few days as focus shifts to the upcoming US inflation data.
US Jobs Data
On Friday, the US released relatively disappointing jobs numbers. The numbers by the Bureau of Labor Statistics (BLS) showed that the labor market continued to struggle in November. The economy added just 210k jobs in November. This was significantly lower than the median estimates of more than 500k. It was also lower than the previous month’s increase of more than 546k jobs.
Still, there are signs that the economy is doing well. For example, the country’s unemployment rate declined to a pandemic-era low of 4.2%. This was a better increase than the median estimate of 4.5%. Also, the country’s wage growth did well in November as it rose by about 4.8%. Also, the number of Americans applying for initial jobless claims has dropped to where they were before the pandemic started.
Therefore, there is a likelihood that the Fed will continue its tightening policies in the coming months. Last week, Jerome Powell hinted that the central bank will increase the pace of tapering in the coming meeting. Besides, the labour market is strong and inflation is still rising. Indeed, analysts expect the country’s inflation data will show that the headline CPI rose to 6.7% in November.
Today, there will be no major economic data from Europe. Therefore, analysts will focus on the rising number of Covid-19 cases in Germany and other European countries. The German government announced that it will start a nationwide vaccination mandate in a bid to slow the new wave. Therefore, the new wave means that the European Central Bank (ECB) will be a bit cautious.
EUR/USD Forecast
The four-hour chart shows that the EUR/USD pair has been in a narrow range in the past few days. The pair is between the pivot point and the first support of the standard pivot point. It has also remained at the same level as the 25-day and 50-day moving averages. A closer look shows that the pair has formed a small inverted head and shoulders pattern.
Therefore, there is a likelihood that the pair will bounce back higher this week. If this happens, the next key resistance level to watch will be at 1.1400.
