- The EUR/USD exchange rate rose on Thursday, exceeding the 1.1100 level again.
- Growth remains restricted following feeble EU retail sales.
- This week, the spotlight will be on the US NFP release, with results due on Friday.
EUR/USD entered a second straight day of gains on Thursday, reclaiming the 1.1100 level as markets broadly sell off the greenback ahead of Friday’s hotly anticipated nonfarm payrolls (NFP) report. Markets are looking for further signs that the Federal Reserve (Fed) is on track to deliver an initial interest rate cut and begin a rate-cutting cycle in September, but US data will need to continue to weaken to keep rate-cut hopes high.
European economic data failed to provide additional support for Fiber after EU retail sales fell compact of expectations in July. Year-on-year retail sales were worse than expected, printing -0.1% for the year ended July and missing the expected rebound to 0.1% from a revised recent decline of -0.4%.
The U.S. added 99,000 net jobs in August, down from a revised 111,000 in July and well below the 145,000 expected, according to payroll data firm ADP. ADP’s August job gains are the weakest since early 2021, sparking a up-to-date wave of risk aversion and renewing investor concerns that the U.S. is headed toward a recession.
The ADP employment report is an indicator of what markets can expect from Friday’s US NFP report, although it has a shaky history of accuracy. The August NFP print is the last significant employment update before the upcoming Federal Reserve (Fed) interest rate call on September 18, when Fed policymakers are expected to begin their rate-cutting cycle. Friday’s NFP print is expected to come in at 160,000, compared to 114,000 the previous month.
According to CME, interest-rate markets are currently betting on a 40% chance that the Fed will open the door with a 50-basis-point cut by the end of the month. The remaining 60% are betting on a more restrained 25-basis-point rate cut at the open. Investors are expecting Friday’s NFP print to be a way to gauge the depth of the Fed’s first rate cut since the Fed cut by 100 basis points in March 2020.
EUR/USD Price Forecast
Bidders continue to emerge from hiding to keep bids in balance, even if they can’t quite pull the bullish line. EUR/USD jumped to a 13-month high just above 1.1200 early last week, and a near-term pullback in Greenback flows has bids struggling to keep bullish chart paper afloat.
The pair continues to trade well above the 200-day exponential moving average (EMA) at 1.0845. Despite remaining deep in bull territory, EUR/USD continues to face an increasingly steep downside correction as shorts pile up targets just above the 50-day EMA at 1.0956.
