EUR/USD Price Analysis – Sep 06, 2024
Daily Price Outlook
During the European trading session on Friday, the EUR/USD extended its winning streak for the third consecutive session, reaching a fresh weekly high of 1.1121. This rise was primarily driven by a weakening US Dollar (USD).
The US Dollar Index (DXY), which measures the Greenback’s strength against six major currencies, fell below the key support level of 101.00.
The decline in the USD's appeal followed disappointing US labor market data, including July's JOLTS Job Openings and August's ADP Employment report, which heightened concerns about deteriorating labor market conditions.
USD Weakness and Fed Rate Cut Speculation Boost EUR/USD Ahead of NFP Data
On the US front, the broad-based US dollar bearish bias is pushing the EUR/USD higher. The US Dollar Index (DXY), which measures the USD against six major currencies, has fallen below the key support level of 101.00.
This decline follows weak US labor market data, including July's JOLTS Job Openings and August's ADP Employment report, showing the lowest job vacancies and payroll additions in over three years.
Despite August's ISM Services PMI data being better than expected, it hasn’t been enough to support the USD. This has led to increased market speculation that the Federal Reserve might cut interest rates more aggressively.
Investors are now focusing on the upcoming US Nonfarm Payrolls (NFP) data for August, set to be released at 12:30 GMT. The report is expected to show an increase in job hires to 160K from July's 114K and a decrease in the unemployment rate to 4.2% from 4.3%.
Additionally, wage growth is anticipated to accelerate, with Average Hourly Earnings expected to rise by 3.7% year-on-year and by 0.3% month-on-month. These figures will be crucial for understanding future interest rate decisions.
Therefore, the USD's weakness and speculation of aggressive Fed rate cuts are driving the EUR/USD higher. If the upcoming NFP data confirms weak labor market conditions and slower wage growth, the EUR/USD could continue to rise as market expectations shift.
Eurozone Data and ECB Rate Cuts Strain Euro, But USD Weakness Drives EUR/USD Higher
On the EUR front, European economic data has not provided much support for the Euro. July's EU Retail Sales data came in worse than expected, showing a decline of 0.1% year-on-year, instead of the anticipated increase to 0.1%. This follows a revised contraction of 0.4% in the previous period, indicating ongoing economic challenges in the Eurozone.
Additionally, the European Central Bank (ECB) is expected to cut interest rates twice more this year. This outlook could further weigh on the Euro, as lower interest rates might reduce the currency's appeal to investors. Despite these challenges, the Euro is still benefiting from the weakness in the US Dollar, driving the EUR/USD pair higher.
EUR/USD - Technical Analysis
EUR/USD is trading at $1.11182, up 0.07%, showing signs of strength as the pair edges higher within a tight range. The 4-hour chart indicates bullish momentum, as the euro holds above its key support levels.
The pair is currently eyeing the pivot point at $1.11537, which will be crucial in determining the next leg of the move. A break above this level could see EUR/USD test immediate resistance at $1.11932, with further gains pushing towards $1.12302.
However, a failure to breach the pivot could open the door for a retracement, with immediate support found at $1.10717 and deeper support at $1.10337 and $1.09995.
The 50-day Exponential Moving Average (EMA) at $1.10920 is acting as a key dynamic support, reinforcing the bullish bias as long as the price remains above this level.
The Relative Strength Index (RSI) is sitting at 65, indicating moderately bullish momentum but nearing overbought territory. A break above 70 could signal further gains, but traders should remain cautious of a potential correction if the RSI starts to roll over.
Given the current technical setup, traders may consider entering long positions above $1.11011, with a take-profit target at $1.11549 and a stop-loss at $1.10716. The technical outlook remains positive as long as the pair holds above the 50-day EMA and the pivot point is respected.
Related News
- GOLD Price Analysis – Sep 06, 2024
JOIN LONGHORNFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.