EUR/USD and GBP/USD Price Forecast: US ADP Non-Farm Employment Change in the Highlights

Highlights

• EUR/USD dips significantly to 1.0921, influenced by economic data and FOMC minutes.
• GBP/USD rises modestly to 1.2664, supported by the UK’s stable economic indicators.
• Upcoming European service sector data and US economic releases to guide EUR/USD and GBP/USD.

EUR Dips and GBP Rises: Economic Data Drives Currency Dynamics

Yesterday, the currency market witnessed contrasting movements between the EUR/USD and GBP/USD pairs. The EUR/USD pair experienced a notable decline, falling by 0.16% to close at 1.0921.

This drop is likely linked to economic data releases and the Federal Open Market Committee (FOMC) minutes, which reinforced the US dollar’s position against the Euro. The FOMC minutes possibly indicated a slower pace for interest rate cuts, strengthening the dollar.

Conversely, the GBP/USD pair saw a modest rise, gaining 0.41% to end at 1.2664. This upward trend may be attributed to the UK’s stable economic environment, as indicated by the steady Final Services PMI of 52.7, suggesting robust economic activity in the UK.

Looking ahead, today’s focus shifts to a slew of data from the European service sector and crucial US economic releases, including the ADP Non-Farm Employment Change and Unemployment Claims.

These data points are expected to provide further direction to the EUR/USD and GBP/USD pairs, reflecting the ongoing influence of regional economic conditions and policy anticipations on currency market dynamics.

EUR/USD Technical Forecast

As of January 4th, the EUR/USD currency pair is facing a critical juncture in the market, reflected in its slight increase to 1.09316, up by 0.12%. The pivot point for the pair is currently at $1.0894. This level is pivotal for determining the pair’s next directional move. Resistance levels are identified at $1.0966, $1.1007, and $1.1081, marking potential points where bullish momentum might face obstacles.

On the flip side, the support levels are at $1.0830, $1.0782, and $1.0740. These levels could provide a cushion against bearish trends. The Relative Strength Index (RSI), a momentum oscillator that measures the speed and change of price movements, is at 36. This figure suggests a bearish sentiment and hints that the pair might be approaching oversold territory, which could signal a potential reversal or pause in the downward trend.

The Moving Average Convergence Divergence (MACD) is showing a slight negative value. The MACD is a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price.  The 50-Day Exponential Moving Average (EMA) of $1.0985 reinforces this bearish trend, as the current price is below this average.

Additionally, an upward trendline at 1.089 and the formation of a tweezer’s bottom pattern suggest the possibility of a bullish correction. This pattern typically indicates a reversal and could be a sign that the selling pressure is subsiding.

In summary, while the short-term outlook for EUR/USD appears cautiously optimistic, particularly above the pivotal $1.089 mark, the pair is still grappling with bearish pressures as indicated by technical indicators.

GBP/USD Technical Forecast

On January 4, the GBP/USD pair showed a positive movement, registering a 0.16% increase to 1.26726. The pair is currently navigating through critical technical levels, with a pivot point established at 1.26162.

Key resistance levels are positioned at 1.26861, 1.27489, and 1.28239, which if surpassed, could indicate a stronger bullish trend.

On the downside, support levels at 1.25715, 1.25330, and 1.25000 provide significant thresholds to watch for any bearish turns. The Relative Strength Index (RSI) at 47 suggests a neutral to slightly bearish sentiment.

The Moving Average Convergence Divergence (MACD) shows a minimal positive crossover, hinting at potential upward momentum. However, the 50-Day Exponential Moving Average (EMA) at 1.2688 could act as a resistance, potentially capping upward movements.

An upward trendline at 1.2615 is supporting the pair, with a series of bullish candles indicating an uptrend. Nevertheless, a decisive bullish crossover above the 50 EMA could trigger further buying, suggesting a cautiously optimistic outlook for GBP/USD in the short term.