Home Forex EUR/USD slips after US non-farm payrolls report

EUR/USD slips after US non-farm payrolls report

by SuperiorInvest
  • A robust US Nonfarm Payrolls report for March drives the dollar higher, impacting EUR/USD.
  • Mixed eurozone economic indicators, including German factory orders and retail sales, contrasted with strong US employment.
  • Further downside is seen in EUR/USD as it technically suggests the potential for a decline below the 1.0800 mark.

The euro posted minimal losses of 0.13% after a stronger-than-expected jobs report. United States (US), which strengthened the dollar bill and sent EUR/USD bottom. At the time of writing, the pair was trading at 1.0822 after hitting a daily high of 1.0847.

EUR/USD falls as positive US labor market data supports US dollar rally

On Friday, the US Bureau of Labor Statistics (BLS) revealed that the economy added more jobs than expected. Non-agricultural wages rose 303,000 in March, beating estimates and previous figures of 200,000 and 270,000. Other data showed the jobless rate falling from 3.9% to 3.8%, while average hourly earnings were in line with consensus.

After the data, the dollar strengthens as US dollar index (DXY) is up 0.155% to 04.36. US Treasury yields are rising between 4.5 and 5 basis points. The 10-year US Treasury bond rate is at 4.365%.

Elsewhere, Richmond Fed President Thomas Barkin noted that rpoert was relatively strong, adding that the reduction in inflation had been uneven. Previously. Boston-based Susan Collins of the Fed commented, but not on monetary policy.

Across the pond, Factory Orders in Germany improved to 0.2% in February, improving from a -1.4% plunge in January. In addition, retail sales of eurozone (EU) fell by -0.5% month-on-month, which is worse than the estimated -0.4% decline.

Due to these factors, EUR/USD retreated below the 200-day moving average (DMA). Traders' focus shifts to next week's data with the release of data on US inflation and consumer sentiment. On the EU front, European Central Bank (ECB) there will be a monetary policy meeting, which will be the highlight of the week.

EUR/USD Price Analysis: Technical Outlook

The emergence of the 'evening' diagram the pattern could pave the way for a decline below 1.0800. Momentum in EUR/USD is tilted to the downside as the Relative Strength Index (RSI) heads lower and below the 50 mid-line. A break below 1.0800 will reveal the April 2 low of 1.0724 before 1.0700. On the downside, buyers will face exciting resistance at the confluence of the 50 and 200-DMA around 1.0828/32.

Euro frequently asked questions

The euro is the currency of the 20 countries of the European Union that belong to the eurozone. It is the second most traded currency in the world after the US dollar. In 2022 it charged for 31% of all foreign exchange transactions with an average daily turnover of over 2.2 trillion dollars per day. EUR/USD is the most traded currency pair in the world, bookkeeping for an estimated 30% discount on all trades, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The European Central Bank (ECB) in Frankfurt, Germany is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB's primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is raising or lowering interest rates. Relatively high interest rates – or expectations of higher rates – usually benefit the euro and vice versa. The Governing Council of the ECB takes decisions on monetary policy at meetings held eight times a year. Decisions are made by the heads of the national banks of the eurozone and six permanent members, including ECB President Christine Lagarde.

Eurozone inflation data, as measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric indicator for the euro. If inflation rises more than expected, especially if it is above the ECB's 2% target, it obligates the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its peers will usually benefit the euro as it makes the region more attractive as a place for global investors to park their money.

The published data assesses the health of the economy and may have an impact on the euro. Indicators such as GDP, manufacturing and services PMIs, employment and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the euro. Not only will this attract more foreign investment, but it may encourage the ECB to raise interest rates, which will directly strengthen the euro. Otherwise, if the economic data is weak, the euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are particularly significant as they account for 75% of the euro area economy.

Another important data release for the euro is the trade balance. This indicator measures the difference between what a country earns on exports and what it spends on imports for a given period. If a country produces a highly sought-after export, then its currency will gain in value purely due to the extraordinary demand created by foreign buyers who want to buy those goods. Therefore, a positive net trade balance strengthens the currency and vice versa a negative balance.

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