Gains Likely as Focus Shifts to ECB


The pair will likely maintain the bullish trend ahead of the upcoming ECB decision.

Bullish View

Bearish View

The EUR/USD price maintained an upward trend on Monday morning as investors reacted to the relatively mixed US employment numbers. The pair is trading at 1.1880, which is a few pips below the highest point last week at 1.1910.

US NFP and ECB Ahead

The volume of the EUR/USD will be relatively muted on Monday as the US observes the Labor Day holiday. Therefore, the focus among investors will be on the US non-farm payroll (NFP) numbers published on Friday.

The data showed that the American economy created more than 235k jobs in August after adding more than 1.1 million jobs in July. The sharp decline was mostly because of the ongoing trends in COVID-19 infection rates.

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At the same time, the US unemployment rate declined from 5.4% in July to 5.2% in August while wages rose to 4.3%. Still, the labour market remains strong, with the number of vacancies rising to more than 10 million.

Additionally, the labor market will likely be supercharged after the US scales down the current enhanced unemployment benefits. Some analysts believe that these benefits are holding some people from the labor market. Besides, these people are making more money staying at home instead of being at work.

With no major economic data from the Eurozone scheduled, investors will focus on the upcoming European Central Bank (ECB) interest rate decision that will happen on Thursday. Some analysts believe that the ECB will soon turn hawkish as the economy rebounds.

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Last week, the spread between the 10-year German and Italian bond yields widened, meaning that there are hopes that the bank will be hawkish. This happened after the relatively strong Eurozone Consumer Price Index (CPI) data. The numbers showed that the headline inflation rose to 3.0% in August.

EUR/USD Forecast

The EUR/USD rose to a high of 1.1900 after the weak US jobs numbers. This was an important level since it was the highest level on July 30. The pair has risen by more than 1.50% from the lowest level in July. It is also slightly below the upper side of the ascending channel.

Also, it has moved above the 25-day and 50-day exponential moving averages (EMA) while the MACD remains above the neutral level. Therefore, the pair will likely maintain the bullish trend ahead of the upcoming ECB decision.

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