EUR/USD and $1.0650 in the Hands of Lagarde and the US Jobs Report

It is a busy day ahead for the EUR/USD. Finalized German inflation numbers for February will draw interest before trade data from France. While the French trade data will influence, inflation remains the focal point. We expect EUR/USD sensitivity to revisions to prelim figures.

According to prelim numbers, Germany’s annual inflation rate held steady at 8.7%. Softer-than-prelim inflation numbers would ease pressure on the ECB post-March. However, the numbers are unlikely to influence the EUR/USD.

Today, the markets will look toward the US Jobs Report that will influence the Fed and the global macroeconomic outlook.

With inflation in focus, investors need to monitor ECB member speeches. ECB Executive Board Members Fabio Panetta and Elizabeth McCaul will speak ahead of ECB President Lagarde.

However, the ECB has to deliver beyond March forward guidance to move the dial.

EUR/USD Price Action

This morning, the EUR/USD was up 0.17% to $1.05971. A mixed start to the day saw the EUR/USD fall to an early low of $1.05768 before rising to a high of $1.05995.

Technical Indicators

The EUR/USD needs to avoid the $1.0569 pivot to target the First Major Resistance Level (R1) at $1.0601. A return to $1.06 would signal a bullish session. However, the EUR/USD would need hawkish ECB chatter and US stats to support a breakout session.

In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $1.0623 and resistance at $1.0650. The Third Major Resistance Level (R3) sits at $1.0678.

A fall through the pivot would bring the First Major Support Level (S1) at $1.0547 into play. However, barring a data-fueled sell-off, the EUR/USD pair should avoid sub-$1.05. The Second Major Support Level (S2) at $1.0515 should limit the downside. The Third Major Support Level (S3) sits at $1.0460.

Looking at the EMAs and the 4-hourly chart, the EMAs send bearish signals. The EUR/USD sits below the 50-day EMA ($1.06006). The 50-day EMA eased back from the 100-day EMA, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A move through the 50-day EMA ($1.06006) and R1 ($1.06010) would give the bulls a run at R2 (1.0623) and the 100-day EMA ($1.06300). However, failure to move through the 50-day EMA ($1.06006) would leave S1 ($1.0547) in play. A move through the 50-day EMA would send a bullish signal.

The US Session

Looking ahead to the US session, it is a big day on the US economic calendar. The heavily anticipated US Jobs Report will be the key driver. Another jump in nonfarm payrolls would likely cement a 50-basis point interest rate hike in March and raise bets of more hawkish post-March moves.

Following Fed Chair Powell’s hawkish testimony and the mid-week labor market numbers, investors should also monitor FOMC member commentary. Hawkish chatter and another spike in hiring would deliver another EUR/USD tumble.