- EUR/USD remains bullish as it broke above the 1.1900 area after a month.
- Dismal US NFP data helped the Euro bulls to resume the rally.
- ECB’s stance is cautious while Fed’s tapering speculation is getting thin.
- Investors will be looking at the ECB meeting and German data next week.
The EUR/USD weekly forecast is bullish as the US dollar maintains offered tone after the dismal US jobs data. Therefore, the probability of jumping higher is quite eminent.
The EUR/USD pair tested a high of July 30 at 1.1910 area on Friday but slightly pared off the gains. However, the positive tone still surrounds the Euro.
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Fed Chairman Jerome Powell’s indecision and disappointing data on local job markets suggest that the pace of tapering will be delayed, making the US dollar more unattractive this week.
US NFP and Fed tapering
According to Powell, employment is slowly recovering, but the path is different. Moreover, recent macroeconomic indicators have confirmed his words, pouring cold water on the market’s hopes.
ADP’s survey assumed low employment levels as 374,000 new private-sector jobs were created, well below the expected 613,000. Also, the subcomponent of manufacturing employment dropped to 49 from 52.9. In summary, the number of non-farm jobs created is below expectations, at 235,000 compared with 750,000. However, with the unemployment rate falling to 5.2% and employment remaining at 61.7%, this is exactly what economists expected.
ECB temporarily on hold
ECB members are likely to suspend monetary policy at their meeting on September 9. As a result, Europe has a cautious atmosphere regarding changing existing policies, and most of the attention is focused on the pandemic.
Aside from central banks, recent economic data has been very discouraging. For example, economic sentiment in the EU fell to 117.5 in August, while consumer confidence slumped to 113.8 in the same month.
August’s final Markit PMI reading has also been released, which shows modest growth otherwise, based on preliminary estimates.
Key events in the Eurozone during Sep 06-10
Next week is going to be a busy week for macroeconomic events in the EU. Germany is also expected to publish data on manufacturing orders, industrial production, and trade balance next Thursday in addition to the ECB meeting. The country will also release a ZEW survey in September, which shows economic sentiment has improved to 56.7. August’s final inflation data will be released as well.
The EU will publish its revised version of gross domestic product this week, while the US does not publish any macroeconomic indicators in the coming week.
Key events from the US during Sep 06 – 10
The important events include the JOLTS job opening due on Wednesday ahead of Fed William’s speech in the US. Moreover, weekly unemployment claims are also important to note. Other than that, US PPI m/m data may also trigger volatility due on Friday. The figure is expected to slide to 0.6% against the previous month’s reading at 1.0%.
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EUR/USD weekly technical forecast: Double top to cap gains
After posting a double bottom at 1.1910, the EUR/USD price retraced back below the 1.1900 level. The Friday’s up bar closed off the highs, below the middle, with a very high volume. The previous few bars have a declining volume. It indicates that the pair may observe a pullback to 1.1850 or even lower to 1.1800 area. On the upside, breaking the double top may lead to 1.1950 ahead of psychological resistance of 1.2000.
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