Euro Hits Forex Low Since February Ahead of NFP Report
EUR/USD is crossing the February FX low of 1.0533 after failing to rise above the 50-day SMA of 1.0723, and events out of the US could keep the exchange rate under pressure as nonfarm payrolls data is expected ( NFP). show further growth in employment.
EUR/USD fails to defend March opening range as Federal Reserve Chairman Jerome Powell warns of a higher U.S. interest rate trajectory and the exchange rate could struggle to hold above its January low of 1.0483 amid rising rate speculation Fed at 50 basis points.
According to the CME FedWatch tool, market participants are forecasting more than a 70% chance that the federal funds rate will rise to a new low of 5.00% to 5.25% on March 22, and it remains to be seen if President Jerome Powell is predicting. a steeper trajectory for US interest rates as the central bank is about to update its SEP.
Until then, US data printouts could weigh on the EUR/USD pair in the FX market as the US economy is expected to add 203,000 jobs in February and wage growth is expected to show similar momentum as the average hourly wages will rise from 4.4% to 4.8% in January.
Further evidence of labor market tightness is likely to boost the ability of the Federal Open Market Committee (FOMC) to implement tougher policies amid signs of prolonged inflation, and positive developments could spark a bullish dollar reaction as market participants brace for a rate hike. rates in the US.
However, further growth in US employment along with signs of strong wage growth could lead to a test of the January low (1.0483) as the EUR/USD pair struggles to recover above the 50-day SMA (1.0723) . , but the EUR/USD exchange rate could follow the flattening slope of the moving average if it continues to defend the 2023 opening range.
EUR/USD daily chart
Chart prepared by David Song, strategist; EUR/USD on TradingView
- EUR/USD is trading near a new monthly low (1.0524) in forex after failing to break above the 50-day SMA (1.0723) and the exchange rate may try to test the January low (1.0483) while it remains. below the moving average.
- Failure to protect a yearly open range could push EUR/USD to the Dec 2022 low (1.0393) with a move below 1.0370 (38.2% Fibonacci extension), increasing the chance of a move towards the 200-day SMA (1.0326) .
- However, lack of momentum to test the January low (1.0483) could lead to range capping in EUR/USD, with a move above 1.0610 (Fibonacci 38.2% retracement) returning the 50-day SMA (1.0723) . radar.
David Song, Strategist, FOREX.com » Official site
David Song has over 15 years of currency trading experience researching commodities and stock indices. He studied macroeconomic policy under a visiting scholar at the Federal Reserve Bank of St. Louis and gained in-depth knowledge of technical analysis from the former president of the Market Professionals Association.
Disclaimer: The information and opinions contained in this report are for general information only and do not constitute an offer or solicitation to buy or sell any currency contracts or CFDs. Although the information contained herein has been obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness and accepts no liability for any direct, indirect or consequential damages that may result from anyone relying to such information.