EUR/USD Forecast: Softening Labor Market Weighing on USD

EUR/USD Forecast: Softening Labor Market Weighing on USD

  • The number of unemployed persons in the US climbed in September by 306,000.
  • The US labor market is starting to soften amid rising interest rates.
  • There might be a fiscal and monetary policy divergence as the eurozone recession looms.

Today’s EUR/USD forecast is bullish. The number of unemployed persons in the US climbed in September by 306,000 to just over 6 million, marking only the seventh rise in the 30 months since the initial coronavirus lockdowns in March and April of 2020.

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In two of the three recent months, there has been an increase in the number of unemployed people, with October’s growth standing out in particular. This demonstrates the “softening” that Federal Reserve officials believe will be necessary to reduce inflation. This has contributed to the rise in the EUR/USD.

On Monday, Eurozone finance ministers will debate ways to better coordinate support for economies against rising energy prices to better prepare for an impending recession.

By unveiling a proposal to support individuals and businesses valued up to 200 billion euros in September, Germany infuriated its fellow members of the European Union. Few nations can match this sum, which opponents claim undermines fair competition in the EU’s single market. The support measures announced by other EU nations are more modest.

Such initiatives, which mirror fiscal stimulus, not only add to the already substantial public debt in the 19-nation eurozone but also make it more challenging for the European Central Bank to combat inflation, which reached an annual rate of 10.7% in October.

EUR/USD key events today

Christine Lagarde is set to talk. She significantly impacts the euro’s value as the ECB’s president, which determines short-term interest rates.

EUR/USD technical forecast: Strong bullish momentum

EUR/USD forecast

Looking at the 4-our chart, we see the price trading well above the 30-SMA and RSI above 50, showing bulls are in control. The price made a sharp move after finding support at the 0.9750 key level. Bulls had so much momentum they went through resistance levels, including the 30-SMA and the 0.9875 key level, without pause. This trend seems set to go on this week.

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If bulls maintain their strength, the price will likely retest 1.0000. Bears might return at parity as it is a strong resistance level. However, the bullish trend will continue if the price stays above the 30-SMA.

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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.