EUR/USD Faces Headwinds Amid Robust US Jobs Data / Fed Signals

EUR/USD Faces Headwinds Amid Robust US Jobs Data and Fed Signals

The EUR/USD pair experienced a significant downturn in the latter part of Friday, closing the week in negative territory. The catalyst for this decline was the release of strong US Nonfarm Payrolls (NFP) data for January, which exceeded market expectations by a substantial margin. The resulting surge in the US Dollar (USD) prompted notable gains against major currencies. The CME FedWatch Tool indicated a decreased probability of a Federal Reserve (Fed) rate reduction in March, falling from 30% early Friday to approximately 15%.

As the new trading week began, the EUR/USD price dipped below the previously observed point of interest and descended beneath the 1.07500 area during the opening of the Monday European session. Currently, the price is within another support structure near the 1.07250 level, positioned just above the 61.8% Fibonacci level and the dynamic trendline. A closer look at the daily timeframe reveals the Stochastic indicator in oversold condition, alongside the RSI approaching a similar status.

Federal Reserve Chairman Jerome Powell, in an interview with CBS News' 60 Minutes on Sunday, reiterated a cautious stance and emphasized that a rate cut in March was premature, lacking the necessary confidence. The market's focus later in the day shifted to the release of the ISM Services Purchasing Managers' Index (PMI) for January in the US economic docket. Expectations were for the headline PMI to improve to 52.0 from December's 50.6. A reading below 50 might initially impact the USD negatively, but sustained weakness is unlikely given the robust labor market report.

Amid these developments, investors are closely monitoring geopolitical tensions in the Middle East, which could influence risk sentiment. Should tensions persist and negatively impact market mood, the USD may see further strength following Wall Street's opening bell.

Our Idea:

Above 1.0725 look for further upside with 1.0950 & 1.10850 as targets.

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✅ Close this position in Take profit please.