EUR/USD Forecast: Navigating ECB Speeches and US Job Openings’ Impact

Highlights

• On Monday, the EUR/USD experienced a 0.92% slide, countering the previous 0.08% gain.
• ECB Chief Economist Philip Lane will address crucial factors influencing inflation today.
• The US JOLTs Job Openings report and FOMC member Raphael Bostic will influence sentiment toward Fed monetary policy.

Monday Overview

On Monday, the EUR/USD slid by 0.92%. Reversing a 0.08% gain from Friday, the EUR/USD ended the day at $1.04771. The EUR/USD rose to a high of $1.05918 before sliding to a low of $1.04766.

ECB Chief Economist Philip Lane in the Spotlight

On Monday, manufacturing PMI numbers for the Eurozone failed to provide EUR/USD support. Investor sentiment toward the Eurozone economy and ECB monetary policy continue to pressure the EUR/USD pair.

Later this morning, ECB Chief Economist Philip Lane will garner investor interest. The ECB Chief Economist will deliver a speech on key factors of inflation and the ECB’s response. Lane will also participate in a panel discussing inflation descending from its peak.

Investors will likely respond to the outlook on inflation, the economy, and monetary policy. Hints of a ‘higher for longer’ interest rate environment, and a rising risk of a prolonged Eurozone recession, would weigh on the EUR/USD pair.

In late September, Lane noted that Eurozone firms were absorbing wage pressures, which would ease demand-driven inflationary pressures. Lane also said labor market conditions have softened, signaling a softer wage growth outlook.

Softer wage growth and an elevated interest rate environment would curb consumer spending. The outlook would ease pressure on the ECB to keep rates higher for longer. However, Eurozone private consumption accounts for over 50% of GDP. A pullback in consumption would adversely affect the Eurozone economy and the EUR/USD.

US JOLTs Job Openings and FOMC Member Speeches in Focus

The US JOLTs Job Openings Report will need consideration later today. A pickup in job openings would signal a tight labor market environment and support wage growth. An upward trend in wages could fuel consumption and demand-driven inflation.

Economists forecast job openings to fall from 8.827 million to 8.800 million in August.

Higher-than-expected numbers would support the hawkish Fed interest rate path.

Beyond the numbers, FOMC member Raphael Bostic is on the calendar to speak today. Hawkish comments would align with the market bets on the higher-for-longer interest rate trajectory.

Short-Term Forecast:

Central bank commentary will dictate EUR/USD trends ahead of service sector PMIs on Wednesday. However, the US Jobs Report will likely decide the near-term outlook for the EUR/USD pair. Currently, monetary policy divergence remains tilted in favor of the dollar.

EUR/USD Price Action

Daily Chart

The EUR/USD sat below the 50-day and 200-day EMAs, affirming bearish price signals.

A EUR/USD break above the $1.05230 resistance level would support a move to the 50-day EMA. Hawkish comments from the ECB Chief Economist and a more optimistic outlook on the Eurozone economy could fuel a breakout.

However, a jump in US job openings and hawkish Fed comments would give the bears a run at the $1.03922 support level.

The 14-period Daily RSI at 27.73 shows the EUR/USD sitting in oversold territory.

4-Hour Chart

The EUR/USD remains below the 50-day and 200-day EMAs, reaffirming the bearish price signals. A break above the $1.05230 resistance level would support a EUR/USD move to the 50-day EMA.

However, a fall below $1.04500 would bring the $1.03922 support level into play.

The 14-period 4-Hourly RSI at 27.82 shows the EUR/USD in oversold territory.