Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1500.
- Add a stop-loss at 1.1750.
- Timeline: 1-2 days.
Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1750.
- Add a stop-loss at 1.1750.
The EUR/USD exchange rate retreated for two consecutive days after the US released a soft labor report and as traders waited for the upcoming inflation report. It dropped to 1.1635, down slightly from the year-to-date high of 1.1820.
US Inflation and SCOTUS Tariff Ruling
The EUR/USD pair pulled back after the Bureau of Labor Statistics (BLS) released the December jobs report. This report revealed that the economy created 55k jobs in December, missing the average estimate of 70k. This addition brought the cumulative jobs created in 2025 to 584,000, its worst year since 202.3
The employment situation worsened because of cost management as companies reflected on Trump’s tariffs. Indeed, the crucial manufacturing sector that he wanted to save continued shedding workers during the year. It also worsened after the president announced large layoffs in the government sector.
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The next key EUR/USD news will come from the US, where Raphael Bostic and Tom Barkin will talk. These officials will talk about the labor market and provide hints on what to expect from interest rates.
The most important catalyst for the pair will be the US inflation report, which will come out on Tuesday. Economists polled by Reuters expect the report to show that the headline and core Consumer Price Index (CPI) rose 2.7% in December.
There are chances that inflation will come out lower than estimates because of the falling gas prices. Data shows that the average gas price has dropped to $2.8 per gallon, the lowest level in years.
The EUR/USD pair will also react to the upcoming Supreme Court decision on Trump’s tariffs. A decision to end these levies would be a big blow to Trump as the US trade deficit is already falling. However, he has some more tools to achieve his tariff goal.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair has retrated in the past few days. This retreat started after it moved to the key resistance level at 1.1805, its highest point on July 3.
The pair has flipped the 50-day moving average into resistance. It has also formed a head-and-shoulders pattern, a common bearish reversal sign. Also, the Relative Strength Index (RSI) and the MACD have all pointed downwards.
Therefore, the most likely forecast is bearish, with the next key target being at 1.1500. A rebound above the right shoulder at 1.1805 will invalidate the bearish outlook.
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