Eurusd rises 0.5% as US labor market moderates and euro area inflation remains stable

EURUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	0.5%	51.2 Pips
Week to-date	-0.87%	-91.2 Pips
February	-0.2%	-20.9 Pips

Upcoming key events (London Time)

No major events for the day.

What happened lately

The recent data from the United States reflect some moderation in the labor market, according to the Job Openings and Labor Turnover Survey (JOLTS), with the number of job openings decreasing from 8.156 million in November to 7.6 million in December. This decline in job openings could imply a cooling of the job market, which might deter aggressive monetary tightening by the Federal Reserve. Additionally, U.S. new orders for manufactured goods continued their downward trend with a 0.9% decrease in December following prior declines. The persistent decrease in manufacturing orders underscores potential weakness in industrial output, possibly signaling slower economic growth.

In contrast, Eurostat data for the Euro Area indicate mixed signals as consumer price indices display varied trends. The Euro Area Harmonized Index of Consumer Prices (HICP) 12-month flash estimate slightly increased to 2.5% in January from 2.4% in December, indicating stable inflation. Meanwhile, the 1-month flash estimate of HICP sees a drop from 0.4% in December to -0.3% in January. On the other hand, the core HICP, which excludes volatile items such as food and energy, remained unchanged at 2.7% on a yearly basis. These indicators suggest potential difficulty in achieving targeted inflation levels and may influence the European Central Bank’s monetary policy decisions.

The divergence in economic data between the United States and the Euro Area could affect EURUSD movements. The softer labor conditions and decreased new orders in the U.S. might lead to a potential pause or slowing down in interest rate hikes by the Federal Reserve, putting downward pressure on the U.S. dollar. Conversely, stability in euro area inflation could bolster the euro if the European Central Bank maintains or tightens its monetary policy stance in response to sustained inflation levels. The EURUSD’s recent rise of 0.5% to 1.03764 may be attributed to these factors. Without significant upcoming events and given the current economic indicators, the EURUSD could maintain its upward trajectory, benefiting from potential dollar weakness and stable Eurozone conditions.

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What can we expect from EURUSD today?

EURUSD on Tuesday rose 0.5% to 1.03764. Price is below 9-Day EMA while Stochastic is rising.

Updated daily direction for EURUSD looks bullish as the pair ended higher after Tuesday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 1.04187 with break above could target R2 at 1.04609 or figure level area. While towards the downside, we are looking at daily low of 1.02720 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.03876 may suggest continuation after recent positive movement.

For the week to-date, take note that EURUSD is mixed as compared to the prior week.

Key levels to watch out:

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