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By the end of last week's trading, the EUR/USD currency pair declined below the support level of 1.0800, with losses extending to the 1.0791 support level. It is relinquishing their gains from the same week, which had reached the resistance level of 1.0877. These recent losses were fueled by data indicating the continued strength of the US labor market, suggesting that the Federal Reserve won't be in a rush to cut US interest rates in the near term.
According to the results of the economic calendar data, the latest jobs report showed that the US economy added a total of 303,000 jobs last month, the largest increase in 10 months and significantly exceeding market expectations of an increase of 200,000. In addition, the unemployment rate in the country fell from a two-year high to 3.8%, while wage growth maintained its strong momentum . On the other hand, slowing inflationary pressures in Europe, coupled with a cautious stance by the European Central Bank, have supported the view that the bloc's central bank will start cutting interest rates as early as June. Moreover, the latest ECB accounts revealed policymakers' growing confidence in the path of inflation towards its 2% target and strengthened the case for a rate cut. Furthermore, data on Wednesday showed a larger-than-expected decline in eurozone inflation to 2.4% in March.
This week, US consumer price data, which comes on the heels of surprisingly strong job numbers, is expected to show a sharp slowdown in core inflation, which explains the Fed's cautious approach to cutting interest rates. The core Consumer Price Index for March, a measure of core inflation that excludes food and energy, is expected to rise 0.3% from the previous month after rising 0.4% in February. Also, the Wednesday report is expected to show a similar increase in the headline CPI.
The core price measure is expected to rise 3.7% from a year earlier, the smallest increase since April 2021. While the annual figure is well below the 6.6% peak reached in 2022, recent progress has been mixed. Overall, the closely watched inflation figures come on the heels of the latest US monthly jobs report, which beat expectations for the fifth straight month. While Fed officials have pointed to moderating labor demand over the past year as a possible prelude to rate cuts, the 303,000 jump in payrolls for March could raise questions about the extent of that moderation, and its implications for inflation.
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Meanwhile, many Federal Reserve officials who spoke last week remained consistent in their messages that it is appropriate to wait until there is clearer evidence that inflation is moderating towards their target before taking the first step towards rate cuts/USD Technical Analysis and forecast:
The Euro is under intense pressure as concerns about the European economy persist. The decline in the EUR/USD price accelerated, as the pair fell to its lowest level since February 15 of this year. According to the platforms of Forex currency trading companies, the exchange rate of the euro against the US dollar collapsed severely, as economic data issued from the United States and Europe indicated a possible difference between the Federal Reserve Bank and the European Central Bank (ECB).
Overall, the EUR/USD pair has been in a strong downward trend for the past few weeks. This decline occurred after the pair peaked at 1.0978 in March. On the daily chart, the pair broke below the lower side of a descending channel. Recently, the exchange rate fell below the 50-day and 25-day moving averages. The two averages formed a bearish crossover pattern. Also, the Klinger Oscillator and the Money Flow Index (MFI) signaled a decline.
Therefore, the outlook for the EUR/USD pair is very bearish, with the next level to watch being the support at 1.0690, and a drop below this level will see the pair retreat to the main support level at 1.0600. In contrast, the bearish outlook will be affected if the euro/dollar succeeds in breaking towards the psychological resistance level of 1.1000.
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