Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1565.
Add a stop-loss at 1.1700.
Timeline: 1-2 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1700.
Add a stop-loss at 1.1565
The EUR/USD exchange rate wavered after the US released a strong nonfarm payrolls report, which raised the possibility that the Federal Reserve will hike interest rates, defying Donald Trump, who has pressed officials to cut. It was trading at 1.1613, slightly lower than last week’s high of 1.1640.
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Odds of Federal Reserve Rate Hikes Rise
The EUR/USD pair was in a tight range as traders reacted to last Friday’s US jobs report. According to the Bureau of Labor Statistics (BLS), the economy added over 162k jobs last month, much higher than what analysts were expecting. The jobs report also revised the July numbers higher.
As a result, traders on key prediction platforms like Polymarket, Robinhood, and Kalshi predicted that the Fed will hike interest rates next week. Similarly, the CME FedWatch tool hiked the odds of a hike to over 60%. A rate hike, however, will come at a time when President Donald Trump is pushing the Fed to cut.
In a statement on Friday, Trump noted that rates should be either at 1% or 0.50%, a move he believes will help the US save money on interest premiums and boost the economy. He pointed to what happened in the past when the US had the lowest interest rates. The challenge, however, is that inflation has remained above the Fed’s 2% target for years and the public debt has jumped to over $40 trillion.
The US markets will be closed today. As such, focus will be on the upcoming European GDP and employment report. Economists expect the data to show that the economy expanded by 1.0% YoY in the second quarter after growing by 0.3% in the previous one.
After that, the main data to watch this week will be Thursday’s producer inflation report, followed by the consumer inflation data a day later.
EUR/USD Technical Analysis
The four-hour chart shows that the EUR/USD pair remained under pressure after the US nonfarm payrolls data. It was trading at 1.1613, a few points below the 23.6% Fibonacci Retracement level.
The pair has moved to the 50-period moving average and the descending trendline that connects the highest swings since August 21. The Relative Strength Index (RSI) is consolidating at the neutral level of 50. Therefore, the pair will likely continue consolidating today as the US markets remains closed. The key support and resistance levels to watch will be at 1.1567 and 1.1700.
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