EUR/USD Daily Forecast – Euro Near 4-Month Low Ahead of NFP Report

EUR/USD has gained downward momentum this week as the single currency has shed 1.2% against the greenback in the week thus far. The greenback has been dominating the majors with the trade-weighted dollar index rallying to levels not seen since mid-October.

The ADP US jobs report released earlier in the week showed an additional 291 thousand jobs in January which is the highest month over month increase in employment since April last year. The data hints that today’s jobs report should come in strong, although analysts are predicting the NFP report will only show an additional 163 thousand new workers.

The unemployment rate is expected to remain unchanged at 3.5% while the forecast for average hourly earnings is set at 0.3%.

Industrial production data from Germany and France came in weaker than expected today. German production in industry was down 3.5% from the prior month, led by a sharp unexpected fall in industrial production.

Technical Analysis

EUR/USD has broken through notable support levels this week and appears poised to decline towards a technical level at 1.0940.

In terms of weekly ranges, the pair trades well outside its typical range for the week. Technical indicators also show the pair in oversold territory.

The NFP report will likely drive the pair in the session ahead. While a stronger report stands to trigger further losses for the pair, the downside may be limited considering the oversold condition.

In the event of a recovery in the pair, upside resistance is seen at 1.0991 for the session ahead.

EUR/USD is set to close the week in the red which would mark five weekly declines out of the last six.

Bottom Line

• EUR/USD is attempting to post five straight days of losses this week and trades nears lows not seen since early October.
• US jobs data will be released in the North American session which should trigger some volatility.