EUR/USD and GBP/USD Price Forecast: Awaiting Non-Farm Payroll’s Influence

Highlights

• EUR/USD Navigates Complex Market: Lower-than-expected German and French CPI figures and mixed Services PMI readings across major Eurozone economies influence EUR/USD, trading at 1.09279.
• GBP/USD Faces Resistance: Despite the UK’s strong Final Services PMI, GBP/USD struggles to break above $1.2698, indicating a cautious, bearish trend.
• Critical Data Releases Ahead: Today’s Nonfarm Payrolls and other key economic indicators will likely impact the short-term direction of both currency pairs.

NFP Data to Steer EUR/USD and GBP/USD Amid Mixed Economic Signals

As the currency market braces for a critical day, all eyes are on the much-anticipated Non-Farm Payroll (NFP) data and its potential impact on major pairs like EUR/USD and GBP/USD.

Currently, EUR/USD hovers at 1.09279, reflecting a slight downtrend amid a blend of economic cues from the Eurozone, including subdued CPI numbers and fluctuating Services PMI data. In contrast, GBP/USD, at 1.26649, marginally declines despite positive UK Services PMI readings.

The upcoming NFP data, a key barometer of the U.S. labor market’s health, holds significant sway in setting the near-term course for these pairs. Economic forecasts for the upcoming Non-Farm Payroll (NFP) data suggest expectations of a moderate shift in the U.S. labor market.

Analysts anticipate the Average Hourly Earnings to rise by 0.3%, slightly lower than the previous 0.4%. The Non-Farm Employment Change is expected to show the creation of 168,000 jobs, a decrease from the previous figure of 199,000.

Additionally, the Unemployment Rate is projected to inch up to 3.8% from the prior rate of 3.7%. A stronger than expected NFP outcome could bolster the USD, applying pressure on EUR/USD and GBP/USD, while a weaker report might soften the dollar, offering potential uplift for these pairs.

These figures will be crucial in shaping market sentiments and could significantly influence the movement of currency pairs like EUR/USD and GBP/USD.

EUR/USD Technical Forecast

The EUR/USD pair, as of January 5, is navigating through a complex phase in the currency market, trading down by 0.15% at 1.09279. This slight downtrend is influenced by a mix of technical indicators and recent economic data releases.

German Prelim CPI m/m came in at 0.1%, lower than the 0.2% forecast. The lower-than-expected German and French CPI figures indicate a slower inflation rate in these major economies, which could impact the European Central Bank’s monetary policy decisions, generally viewed as bearish for the Euro.

Services PMI readings across Spain, Italy, France, and Germany showed mixed results, with Spanish Services PMI at 51.5, Italian Services PMI at 49.8, French Final Services PMI at 45.7, and German Final Services PMI at 49.3. The overall Eurozone Final Services PMI stood at 48.8. Mixed Services PMI data across major Eurozone countries reflects a varied economic recovery, adding to the currency’s uncertainty.

The pair’s current pivot point is at $1.0970, with immediate resistance levels at $1.1007, $1.1081, and $1.1141, hinting at key barriers for any potential upward movement. Support is found lower at $1.0894, $1.0828, and $1.0773, which could prevent further declines.

The Relative Strength Index (RSI) at 41 suggests a bearish sentiment, while the pair trading below its 50-Day Exponential Moving Average (EMA) of $1.0977 further indicates a bearish trend.

A key technical observation is the difficulty of the EUR/USD to break above the $1.0965 mark, a resistance extended by a downward trendline and the 50 EMA line. This resistance level is critical; staying below it could lead to a stronger selling bias.

EUR/USD Trade Idea

Potential Entry Price – Sell Below 1.09436
Take Profit – 1.08932
Stop Loss – 1.09833

The short-term outlook for the EUR/USD remains bearish, particularly if it continues to struggle below the $1.0965 resistance. Investors and traders should closely monitor these technical levels and macroeconomic indicators to gauge the pair’s future direction.

GBP/USD Technical Forecast

The GBP/USD pair’s recent trajectory, slightly down at 1.26649, is shaped by multiple fundamental and technical factors. The UK’s stronger-than-expected Final Services PMI, rising to 53.4 against the forecast of 52.7, indicates robust economic activity, providing a potential boost to the Pound.

However, the slight dip in the M4 Money Supply and mixed mortgage approvals and net lending figures add complexity to the economic outlook.

Technically, the pair struggles to break above the pivot point of $1.2698, with the RSI at 47 suggesting a neutral to bearish sentiment. The 50 EMA at $1.2688 serves as a critical juncture, with resistance at $1.2729 and $1.2766.

GBP/USD Trade Idea

Potential Entry Price – Sell Below 1.26955
Take Profit – 1.26367
Stop Loss – 1.27285

Today’s release of Nonfarm Payrolls (NFP) data could be pivotal in determining the short-term direction of GBP/USD. The currency pair’s trend seems cautious, with a bearish bias unless it surpasses key resistance levels.