EUR/USD Bears Eye Sub-$1.09 on US Jobs Report

Highlights

• On Friday, the EUR/USD sits in the hands of German factory orders and Eurozone retail sales early in the European session.
• However, the US Jobs Report will have the final say.
• The nearer-term technical indicators are bearish, with the bears eying $1.09.

On Thursday, the EUR/USD declined by 0.42% to wrap up the day at $1.09491. Service sector PMI numbers fueled recessionary jitters, sending the EUR/USD into the red.

After disappointing private sector PMI numbers from Germany, German factory orders will draw interest this morning. However, economists forecast more doom and gloom, with factory orders expected to fall by 1.5% in June. In May, factory orders surged by 6.4%.

Germany is the production epicenter of the Eurozone. Weak manufacturing sector activity and output are bearish indicators, raising the prospects of an extended recession.

No ECB Executive Board Members are on the calendar to speak today, leaving chatter with the media to move the dial.

The US Session

It is a busy US session, with the US Jobs Report to draw interest. A pickup in wage growth and a steady US unemployment rate would refuel bets on a September Fed rate hike. Economists forecast average hourly earnings to slow from 4.4% to 4.2 and the unemployment rate to hold steady at 3.6%.

The US labor market forms part of the Fed’s dual mandate. The FOMC Committee forecasts the longer-run normal rate of unemployment to be 4.1%. The US unemployment rate fell from 3.7% to 3.6% in June. Tighter labor market conditions would lead to higher wage growth levels and a demand-driven inflation pickup. Higher borrowing costs would curb hiring and wage growth.

EUR/USD Price Action

Daily Chart

The Daily Chart showed the EUR/USD hover below the $1.1060 – $1.1015 resistance band and the 50-day EMA ($1.09710). However, the EUR/USD held above the 200-day EMA ($1.07892), sending bearish near-term but bullish longer-term price signals.

A EUR/USD move through the 50-day EMA would give the bulls a run at the $1.1015 – $1.1060 resistance band to target $1.11. However, failure to move through the 50-day EMA ($1.09710) would leave the $1.0900 – 1.0850 support band in play.

Looking at the 14-Daily RSI, the 44.42 reading sends bearish price signals. The RSI suggests a fall through the $1.0900 – 1.0850 support band.

4-Hourly Chart

Looking at the 4-Hourly Chart, the EUR/USD sits below the $1.1060 – $1.1015 resistance band. The EUR/USD remained below the 200-day ($1.10024) and 50-day ($1.10045) EMAs, sending bearish near and longer-term price signals.

The 50-day EMA converged on the 200-day EMA, with a bearish cross likely to send the EUR/USD through the $1.0900 – 1.0850 support band. However, a EUR/USD move through EMAs would support a run through the $1.1015 – $1.1060 resistance band to target $1.11.

The 14-4H RSI at 44.54 sends bearish EUR/USD price signals, with selling pressure outweighing buying pressure. Significantly, the RSI aligns with the 50-day EMA, signaling a fall to the $1.0900 – 1.0850 support band.

Price action today will hinge on the US Jobs Report.