Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0973.
- Add a stop-loss at 1.0850.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.0877 and a take-profit at 1.0830.
- Add a stop-loss at 1.0965.
The EUR/USD price drifted downwards after the mixed non-farm payrolls (NFP) data published on Friday last week. It moved to a low of 1.0900, which was lower than this month’s high of 1.0973 as focus now shifts to this week’s inflation data.
Fed minutes and US inflation
The EUR/USD has been calm since Friday as European and American countries celebrate the Easter holiday. On Friday, data from the US showed that the economy added over 236k jobs in March after adding an upwardly revised 326k in February. This increase was about 2k short of what analysts were expecting. This addition means that the economy created over 1 million jobs in Q1.
Another part of the report showed that the unemployment rate dropped to 3.5% in March from the previous 3.6%. Most importantly, the closely-watched participation rate rose to the highest level since the pandemic.
However, there are signs that wages are cooling as companies shift to capital preservation. The average wage index slowed to 4.3%, the lowest level since June 2021.
These jobs numbers were important because the Fed has pledged to be more data-dependent in its fight against inflation. The jobs report is so important because it forms part of the Fed’s dual-mandate.
The other part of this mandate is inflation. Inflation numbers will come on Wednesday this week. With the labor market tightening, analysts believe that inflation remains at an elevated level. Economists expect that the headline inflation dropped from 0.4% in February to 0.3% in March. This will translate to an annual drop from 6.0% to 5.2%. The closely-watched core inflation figure is expected to come in at 0.4%.
The other top EUR/USD news for the week will be the upcoming Fed minutes. These minutes will provide more information about what the Fed members talked about in their last meeting.
EUR/USD technical analysis
The EUR/USD pair rose to a high of 1.0973 on Wednesday and then pulled back to a low of 1.0877 on Friday. This was an important level since it was along the lower side of the ascending channel that connects the lowest levels since March 16th. The pair has moved slightly below the first resistance of the Woodie pivot points. It is also being supported by the 50-period moving average.
Therefore, the outlook of the EUR to USD pair is bullish, with the next level to watch being at 1.0973, last week’s high.
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