EUR/USD Eyes $1.0950 to Target $1.10 on the US Jobs Report

It is a quiet day ahead for the EUR/USD. There are no economic indicators for investors to digest with the major European markets closed.

The holidays and the lack of stats will leave investors to consider the latest economic indicators from Germany and the US. While the numbers from Germany have been impressive, US labor market data has raised fears of a US recession.

Despite the diverging indicators, ECB and Fed chatter remained bullish this week.

On Wednesday, ECB Chief Economist discussed inflation, reportedly said,

“I look at food, where inflation pressure is probably its most intense. And it’s still rising now. I don’t think we are yet at the peak of food inflation, it’s not yet there, but again it’s projected to fall this year.”

According to prelim figures, food, alcohol, & tobacco saw the highest annual rate at 15.4% versus 15.0% in February.

On Thursday, FOMC member James Bullard also talked about inflation, saying,

“We’ve got a long ways to go, and I think inflation is going to be sticky going forward. It’s going to be difficult to get inflation back down to the 2% target… so we are going to have to stay at it in order to apply pressure to make sure inflation gets back down.”

Ultimately, the stats and the views on inflation and monetary policy favored the EUR on Thursday.

EUR/USD Price Action

This morning, the EUR/USD was up 0.01% to $1.09193. The EUR/USD rose to an early high of $1.09240 before falling to a low of $1.09139.

Technical Indicators

The EUR/USD needs to avoid the $1.0914 pivot to target the First Major Resistance Level (R1) at $1.0943. A move through the Thursday high of $1.09376 would signal a bullish session. However, the EUR/USD needs the US Jobs Report to support a breakout session.

In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $1.0967. The Third Major Resistance Level (R3) sits at $1.1020.

A fall through the pivot would bring the First Major Support Level (S1) at $1.0889 into play. However, barring a data-fueled sell-off, the EUR/USD pair should avoid sub-$1.0850. The Second Major Support Level (S2) at $1.0860 should limit the downside. The Third Major Support Level (S3) sits at $1.0807.

Looking at the EMAs and the 4-hourly chart, the EMAs send bullish signals. The EUR/USD sits above the 50-day EMA ($1.08778). The 50-day EMA pulled further away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above S1 ($1.0889) and the 50-day EMA ($1.08778) would support a breakout from R1 ($1.0943) to give the bulls a run at R2 ($1.0967). However, a fall through S1 ($1.0889) and the 50-day EMA ($1.08878) would bring S2 ($1.0860) into play. A fall through the 50-day EMA would send a bearish signal.

The US Session

Looking ahead to the US session, it is a busy day on the US economic calendar. The all-important US Jobs Report will draw interest.

Labor market numbers raised fears of a US recession this week. However, hawkish Fed chatter places a greater emphasis on today’s report. Weak numbers would fuel fears of a recession, while a hotter-than-expected Jobs Report would likely raise bets of another Fed interest rate hike.

Investors should also monitor Fed chatter on monetary policy and the US economy.