EUR/USD rebounds in whippy trading as markets lean into NFP prep – Crypto News – Crypto News
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EUR/USD declines towards 1.0000 on expectation of hawkish guidance by Fed in Jackson Hole EUR/USD declines towards 1.0000 on expectation of hawkish guidance by Fed in Jackson Hole

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EUR/USD rebounds in whippy trading as markets lean into NFP prep – Crypto News

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  • EUR/USD sees choppy declines as 1.0900 slips away.
  • European inflation vexes rate cut hopes.
  • Markets pivot toward Friday’s US NFP.

EUR/USD dipped and recovered in a rough Thursday session, grinding lower in whipsaw action as the pair tests new lows in the near-term and slips further back from key technical levels.

European inflation declined less than markets were hoping, but currency markets have shifted into shorting the US Dollar (USD) across the board as investors recover from Wednesday’s hawkish showing from the US Federal Reserve (Fed).

Investors will be looking toward Friday’s US Nonfarm Payrolls (NFP) print for signs that the US economy will start to decay enough to force the Fed into a faster pace of rate cuts.

Daily digest market movers: EUR/USD recovers into near-term highs, but ceiling noticeable

  • EUR/USD recovered back into 1.0880 region, but 1.0900 looks difficult to snag.
  • The euro area saw inflation decline less than markets hoped for, keeping rate cut expectations at bay.
  • Pan-European Harmonized Index of Consumer Prices (HICP) inflation eased to 3.3% for the year ended in January, missing the median market forecast of 3.2% and trimming only slightly back from the previous period’s 3.4%.
  • US January ISM Manufacturing Purchasing Managers’ Index (PMI) bounded into a new three-plus year high of 49.1 versus the forecast backtick to 47.0 from December’s 47.1.
  • US Initial Jobless Claims ticked upwards to 224K for the week ended January 26 versus the forecast 212K, rising above the previous week’s 215K (revised from 214K).
  • EUR/USD set to continue a rough pattern heading into Friday’s US NFP, forecast to print at 180K for January versus December’s 216K.
  • NFP Preview: Forecasts from 10 major banks

Technical analysis: EUR/USD bounces, but swing highs remain capped below 1.0900

EUR/USD climbed back over the 200-hour Simple Moving Average (SMA) newar 1.0850 on Thursday, but failed to reclaim near-term highs around 1.0880 as technical swings remain trapped in a lower highs pattern.

Thursday’s upswing brings EUR/USD back over the 200-day SMA just below the 1.0850 level, and the pair remains trapped in a roughly-bearish sideways grind, keeping EUR/USD trapped on the low side of technical consolidation range between the 50-day and 200-day SMAs with the ceiling priced in just above the 1.0900 handle.

EUR/USD hourly chart

EUR/USD daily chart

Nonfarm Payrolls FAQs

Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.

The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation.
A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work.
The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.

Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower.
NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.

Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa.
Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold.
Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.

Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components.
At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary.
The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.

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