- The EUR/USD price analysis shows a return to US assets.
- The US is finally ready to initiate trade talks with China.
- The nonfarm payrolls report will shape the outlook for Fed rate cuts.
The EUR/USD price analysis shows a return to US assets that is weighing on the euro. Easing trade tensions between China and the US have given investors enough confidence to start buying US assets, which has caused the euro to lose its appeal. However, the pair edged higher on Friday as market participants awaited the US monthly employment report.
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Reports on Thursday revealed that the US was finally ready to initiate trade talks with China. Meanwhile, China said on Friday that it was evaluating an offer to hold talks with the US. These reports boosted hopes of an end to the ongoing trade war between the two countries. Last week, both nations took on softer stances on tariffs. The US was willing to bring them down while China exempted some goods from tariffs.
Initially, the tariffs had eroded investor confidence in the US, leading to a flow of cash into neighboring regions like the Eurozone. As a result, the euro rallied. However, it is now losing that appeal as traders flock back to the dollar.
Nevertheless, traders are still worried about the US economy. Data during the week has revealed weakness in the labor market and softer activity in the manufacturing sector. The nonfarm payrolls report will carry more weight, shaping the outlook for Fed rate cuts.
EUR/USD key events today
- US average hourly earnings m/m
- US nonfarm employment change
- US unemployment rate
EUR/USD technical price analysis: Bears struggle to make a new low
On the technical side, the EUR/USD price has paused its decline after another failed attempt to break below the 1.1301 support level. Nevertheless, the price still trades below the 30-SMA, with the RSI under 50, supporting a bearish bias.
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EUR/USD recently reversed when bulls failed to break above the 1.1550 resistance level. Bears took over by pushing the price below a strong support trendline and the 30-SMA. However, they are yet to confirm a new downtrend.
The price must start making lower highs and lows to show that the direction has changed. The price recently made a lower high. The next step is to break below 1.1301 to make a lower low. If this fails, EUR/USD will climb to retest the 1.1550 resistance level.
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Saqib Iqbal
