Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0250.
- Add a stop-loss at 1.0400.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.0330 and a take-profit at 1.0400.
- Add a stop-loss at 1.0250.
The EUR/USD exchange rate retreated as the US released mixed nonfarm payroll (NFP) data on Friday. It retreated to a low of 1.3200, down from this year’s high of 1.0539, as focus now shifts to the upcoming US consumer price index (CPI) data.
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US inflation data ahead
The EUR/USD pair retreated after the US released encouraging jobs data. According to the Bureau of Labor Statistics (BLS), the economy created 140k jobs in January, down from the 307k it created a month earlier.
The unemployment rate improved from 4.1% to 4.0%, better than the median estimate of 4.1%. More data showed that the average hourly earnings rose by 4.1% on a YoY basis and to 0.5% on a MoM basis.
These numbers came as traders anticipated for the upcoming US inflation data, which will come out later this week. Economists expect the numbers to show that the headline Consumer Price Index (CPI) remained at 2.9%, while the core CPI remained at 3.2%.
The US inflation and jobs numbers will help the Federal Reserve when making its next interest rate decision. Economists expect the Fed to maintain interest rates steady at 4.50% in the next few meetings.
The Fed is concerned about inflation, which has remained above the 2% target for a while. Officials also believe that that the economy is strong to withstand higher interest rates for longer.
The EUR/USD pair will react to an upcoming statement by Jerome Powell, the head of the Federal Reserve chair. It will be his first statement after the US nonfarm payroll data.
The EUR/USD pair will also react to a potential statement by Donald Trump about tariffs on European goods.
EUR/USD technical analysis
The EUR/USD exchange rate bounced back to a high of 1.0530 last week and then resumed the downward trend. It retreated to a low of 1.0327 and moved below the 50-day and 25-day Exponential Moving Averages (EMA).
The pair has dropped below the key level at 1.0450, its lowest swing in October 2023. Also, the Average True Range (ATR) has dropped to its lowest level in July last year. The ATR is a popular indicator used to show a trend’s strength.
Therefore, the pair will likely continue falling as sellers target the next psychological point at 1.0250. A move above the resistance point at 1.0400 will invalidate the bearish view.
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