Home EUR/USD Outlook: Jobs Data Casts Doubt on Dollar Strength

EUR/USD Outlook: Jobs Data Casts Doubt on Dollar Strength

  • US jobs data indicated a potential cooling trend.
  • Markets are pricing in a 93% likelihood of the Fed pausing this month.
  • European Central Bank President Christine Lagarde will speak later in the day.

Today’s EUR/USD outlook is slightly bullish. On Monday, the dollar slipped as US markets observed a holiday. At the same time, investors assessed US jobs data, indicating a potential cooling trend. Consequently, there was increased speculation that the Federal Reserve may have reached the end of its monetary tightening efforts. 

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Notably, Friday’s data revealed an uptick in US job growth for August. However, it also showed a rise in the unemployment rate to 3.8%, along with moderated wage gains. Furthermore, the economy generated 110,000 fewer jobs than initially reported for June and July. 

Economic indicators highlighting slowing inflation and a softening labor market have reinforced the belief that the US economy is cooling.

Meanwhile, according to the CME FedWatch tool, markets are currently pricing in a 93% likelihood of the Fed pausing this month. Moreover, there is a more than 60% chance of no further rate hikes this year. 

However, given the closure of US markets on Monday, liquidity could be limited. Despite European Central Bank President Christine Lagarde’s scheduled speech later in the day, analysts at UniCredit anticipate subdued trading activity on Monday. 

The euro showed a 0.2% increase but remained just above a 10-week low against the dollar reached last week.

Looking ahead, investors will closely monitor speeches from several Federal Reserve officials. These will help them gain insights into the central bank’s intentions leading up to its next policy meeting on September 19-20.

EUR/USD key events today

Investors are not awaiting any major economic releases from the US. However, a speech later from ECB president Christine Lagarde could move the pair a bit.

EUR/USD technical outlook: Buyers stage a comeback with a feeble rebound.

EUR/USD technical outlook
EUR/USD 4-hour chart

On the charts, the EUR/USD’s decline has paused at the 1.0775 support level. Buyers have resurfaced and are attempting a rebound. However, the rebound is weak as the price has made smaller candles than the previous move. 

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Meanwhile, the indicators suggest a continuation of the downward move. The 30-SMA sits above the price supporting buyers, and the RSI is in bearish territory below 50. Therefore, bears might soon return to retest and possibly break below 1.0775.

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Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.