EUR/USD Eyes a Return to $1.0650 on the US Jobs Report

It is a busy day for the EUR/USD on the economic calendar, with inflation in the spotlight.

Wholesale inflation figures for the Eurozone will draw interest this afternoon. Following the softer CPI numbers on Wednesday, today’s numbers could support the view that inflation may have peaked.

Economists forecast the wholesale annual inflation rate to soften from 41.9% to 31.5%.

Other stats include French industrial production and German trade data. However, following the manufacturing PMI numbers on Thursday, today’s stats would need to be dire to move the dial.

With the markets focused on inflation, the economic outlook, and monetary policy, ECB chatter will also influence. This morning, ECB President Lagarde will speak, with ECB member Luis De Guindos speaking later in the day.

Economic data from the Eurozone suggests that the ECB may need to take a less hawkish stance to bring inflation to target. Hawkish chatter would deliver EUR support, with inflation still elevated.

EUR/USD Price Action

At the time of writing, the EUR was down 0.15% to $1.05105. A mixed start to the day saw the EUR/USD rise to an early high of $1.05395 before falling to a low of $1.05092.

Technical Indicators

The EUR/USD needs to avoid the $1.0484 pivot to target the First Major Resistance Level (R1) at $1.0576. Hawkish ECB chatter and worse-than-expected US economic indicators would support a breakout session.

In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $1.0625 and resistance at $1.0650. The Third Major Resistance Level (R3) sits at $1.0767.

A fall through the pivot would bring the First Major Support Level (S1) at $1.0435 into play. However, barring a US data-fueled sell-off, the EUR/USD pair should avoid sub-$1.040 and the Second Major Support Level (S2) at $1.0343.

The third Major Support Level (S3) sits at $1.0202.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The EUR/USD sits above the 50-day EMA ($1.03790). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above S1 ($1.0435) and the 50-day EMA ($1.03790) would support a breakout from R1 ($1.0576) to target R2 ($1.0625). However, a fall through S1 ($1.0435) would bring the 50-day EMA ($1.03790) and S2 ($1,0343) into play. The 200-day EMA sits at $1.01804.

The US Session

It is a busy day ahead, with the US Jobs Report in focus. A jump in nonfarm payrolls and a sharp increase in wage growth could test the Fed pivot theory.

FOMC member chatter will also need monitoring, with FOMC member Evans speaking after the Jobs Report.