The EUR/USD pair is currently positioned around 1.1597, marking its fourth consecutive session of subdued trading as market participants gear up for the significant U.S. Nonfarm Payrolls data scheduled for release later this week. The euro is currently situated just below the 1.1600 psychological level, reflecting a fragile balance between robust dollar demand and limited momentum in the eurozone. The strength of the U.S. dollar, supported by assertive comments from the Federal Reserve and a careful stance on risk, has kept the pair within a narrow range — unable to break through the descending trendline that has limited each rally since late September. The U.S. Dollar Index is currently trading at approximately 99.46, indicating a recovery from last week’s low as market participants take a more cautious approach. Traders have lowered their expectations for a December rate cut to 43%, down from 62%, following comments from Fed Governor Christopher Waller and Vice Chair Philip Jefferson, who warned that the slowdown in hiring could suggest labor “stall speed.” The Fed’s reluctance to embrace easing measures has put pressure on risk-sensitive currencies, causing the euro to stay limited even though it is in oversold territory.
Across the Atlantic, eurozone fundamentals remain largely unchanged. The policymakers at the European Central Bank are taking a careful approach, as most members are leaning towards maintaining the current rates. The EU September Current Account and the October HICP final estimate—both set to be released this week—are anticipated to have little effect on the current expectations of policy stability. The lack of a driving force has made the euro vulnerable to U.S. economic factors, particularly in relation to employment and inflation reports. The EUR/USD structure shows a clear range of congestion, featuring support at 1.1570 and resistance at 1.1650. The pair is presently trading slightly above its 100-period SMA on the 4-hour chart, yet it remains limited beneath the 20- and 200-period SMAs, located around 1.1610. The present short-term trend seems to be neutral to bearish, with momentum indicators indicating a pause rather than a reversal. The RSI is currently at 48, suggesting minimal selling pressure, while the Momentum oscillator indicates a downward trend. The daily chart illustrates this equilibrium: the 20-SMA hovers near 1.1600, while the 100-SMA at 1.1655 constrains any upward shifts. The 200-SMA is still moving upward but is starting to slow down, indicating a medium-term tendency for gradual consolidation rather than a strong breakout.
For traders, immediate supports are identified at 1.1570, 1.1540, and 1.1510, while resistance is positioned at 1.1610, 1.1655, and 1.1690. A strong finish above 1.1720 would suggest a notable change in momentum, possibly leading towards 1.1810. However, as long as the price stays limited below the descending trendline from 1.1818, each bounce poses the risk of succumbing to renewed selling pressure. The upcoming U.S. September NFP report is the main driving force. Experts forecast an increase of 50,000 jobs, following the 22,000 rise noted in August, with unemployment expected to stay near 4.3%. A strong report could likely boost the dollar, driving EUR/USD down to the 1.1540–1.1500 range, while underwhelming figures might lead to short-covering up to 1.1670–1.1710. The NFP release is crucial after the six-week U.S. government shutdown, which delayed key labor and inflation data. The reopening has brought back a steady stream of data, leading markets to modify their policy predictions as a result. Officials from the Federal Reserve, including Thomas Barkin from Richmond and Vice Chair Michael Barr, are scheduled to speak to the public ahead of the data release, which may impact short-term market expectations.
The euro area is presently trailing the U.S., encountering issues like stagnant growth and a drop in industrial output. ECB President Christine Lagarde has emphasized the importance of being careful, noting that inflation is still low while warning against the belief that there is room for major reductions in policy. The Eurozone Current Account maintains a positive balance, though it’s quite limited, as weak exports and slowing German factory data dampen immediate optimism. Market participants are paying close attention to the upcoming HICP inflation data set scheduled for release on Wednesday. Nevertheless, forecasts suggest minimal changes of about 2.4% year-over-year, which are not expected to lead to any substantial directional shifts. Without fresh economic catalysts from Europe, traders are recalibrating their positions on EUR/USD based on U.S. macroeconomic indicators. The volatility in FX markets has significantly diminished. The Average True Range for the EUR/USD pair has dropped to 42 pips, reaching its lowest point since early August. This compression often takes place prior to major directional breakouts triggered by data or policy shocks. At present, traders describe the market as “coiled,” with most short-term strategies focusing on scalping within the tight intraday ranges of 1.1580–1.1620. The RSI is presently moving between 40 and 55, indicating a lack of clear direction from both bulls and bears. Nonetheless, longer-term traders observe that the pair has adhered to the ascending trendline from 1.1184, maintaining a medium-term bullish structure that will remain intact as long as the 1.1500 level is sustained. The broader Dollar Index remains stable around 99.50, supported by a general risk aversion in global markets. The index is presently moving within a downward channel, but it has consistently found support in the range of 99.00–98.65. Technical resistance at 99.70 and 100.02 remains a barrier currently; however, any upward breach could potentially extend the euro’s downward trend. The DXY’s RSI sitting near 50 suggests a balanced momentum situation. Nonetheless, the persistent weakness in stocks along with subdued commodities is attracting cautious investments into the dollar.
This dynamic limits the euro’s ability to capitalize on even dovish Fed comments. The EUR/USD is presently moving within important Fibonacci retracement levels. The range of 1.1184–1.1822 shows that the 0.382 retracement is around 1.1500, while the 0.618 retracement is at 1.1680, setting the immediate limits for the pair. The rejection in the range of 1.165–1.168 last week established this resistance area as an important supply zone. A decisive move above 1.1720 would suggest a significant shift in structure, while a decline beneath 1.1540 might exacerbate losses towards 1.1340, aligning with the consolidation pattern seen over the summer. Futures data from the Chicago Mercantile Exchange show a 3.4% decline in euro long contracts compared to the previous week, alongside a 5.1% rise in short positions, leading to a net positioning of just +4,200 contracts. This impartial position highlights market ambiguity rather than a firm directional conviction. The current option-implied volatility is around 6.7% for a 1-month tenor, which is notably low, indicating that traders do not expect substantial movements after the NFP release. The EUR/USD pair’s inability to break above 1.1650 suggests a dominant short-term downward trend. With the chances of a Fed rate cut decreasing and the dollar holding steady near 99.50, the most likely path seems to be a decline towards the 1.1540–1.1500 range. However, the duo’s steady defense of 1.1570 suggests possible buildup in expectation of major macroeconomic developments. From a tactical perspective, traders tend to sell rallies near the 1.1650–1.1680 range, placing stops above 1.1720. Meanwhile, patient buyers might look to accumulate positions near 1.1510–1.1540 for a potential medium-term rebound should U.S. data disappoint.