EUR/USD and a Return to $1.1050 in the Hands of the US Jobs Report
It is a busy day ahead for the EUR/USD. Early in the European session, French industrial production numbers will draw interest. However, services PMI numbers from Spain and Italy and finalized PMIs for France, Germany, and the Eurozone will have more influence.
A pickup in service sector activity would support the hawkish policy move from Thursday. At the ECB Press Conference, ECB President Lagarde said,
“The risks to the inflation outlook have become more balance.”
“Other indicators of underlying inflation are also still high.”
With the ECB pledging another 50-basis point rate hike in March, inflation sub-components of the PMI surveys will need consideration.
Investors also need to track ECB member speeches. However, no members are due to speak today, leaving chatter with the media to influence. It is unlikely that ECB President Lagarde will discuss the euro area economy or monetary policy at an International Holocaust Remembrance Day commemoration event today.
EUR/USD Price Action
At the time of writing, the EUR was down 0.01% to $1.09086. A range-bound start to the day saw the EUR/USD rise to an early high of $1.09098 before easing back.
The EUR/USD needs to move through the $1.0942 pivot to target the First Major Resistance Level (R1) at $1.1000 and the Thursday high of $1.10328. A return to $1.10 would signal a bullish session. However, the EUR/USD would need the PMI numbers and US Jobs Report to support a breakout session.
In the case of an extended rally, the bulls will likely test resistance at $1.1050 but fall short of the Second Major Resistance Level (R2) at $1.1090. The Third Major Resistance Level (R3) sits at $1.1238.
Failure to move through the pivot would leave the First Major Support Level (S1) at $1.0852 in play. However, barring a US Jobs Report-fueled sell-off, the EUR/USD pair should avoid sub-$1.08 and the Second Major Support Level (S2) at $1.0795.
The third Major Support Level (S3) sits at $1.0647.
Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The EUR/USD sits above the 50-day EMA ($1.08888). The 50-day EMA moved away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.
A hold above the 50-day EMA ($1.08888) would support a breakout from R1 ($1.1000) to target $1.1050. However, a fall through the 50-day EMA ($1.08888) would give the bears a run at S1 ($1.0852) and the 100-day EMA ($1.08436). A fall through the 50-day EMA would send a bearish signal.
The US Session
It is a busy day on the US economic calendar. The US Jobs Report for January will be the key driver today. Following better-than-expected jobless claims figures from Thursday, a marked increase in nonfarm payrolls and better-than-expected wage growth would drive dollar demand.
Economists forecast average hourly earnings to rise by 4.3% year-over-year versus 4.6% in December and for nonfarm payrolls to increase by 185k.
Later in the session, the ISM Non-Manufacturing PMI and sub-components will also influence. Beyond the headline figure, investors need to consider employment, new orders, and price sub-components.