Introduction
The euro has been on a steady rise against the US dollar this year, supported by a hawkish European Central Bank (ECB) and a comparatively less aggressive Federal Reserve. However, the recent US Non-Farm Payroll (NFP) report has cast doubts on the euro’s strength, as the report showed a tight labor market and elevated earnings figures in the US. With the upcoming US CPI data and NFP report in focus, the euro may face further bearish pressure.
Euro Fundamental Forecast: Bearish
The euro’s recent strength may be coming to an end as the focus turns to the upcoming US CPI data and NFP report. The euro has gained almost 3% against the US dollar year-to-date, supported by the hawkish stance of the ECB. However, the NFP report released last week highlighted the tight labor market in the US, which may put pressure on the euro’s gains.
US CPI Data and NFP Report
The upcoming US CPI data and NFP report are expected to be crucial in determining the direction of the euro against the US dollar. The CPI data, which measures inflation, is expected to show possible inflationary pressures, which could lead to a stronger US dollar. Meanwhile, the NFP report, which measures employment figures, is expected to show a tight labor market in the US, which could further strengthen the US dollar.
Possible Rising Wedge Breakout
The daily chart for the euro against the US dollar shows a possible rising wedge breakout, which could further signal bearish pressure on the euro. A rising wedge breakout occurs when the price of an asset is making higher highs and higher lows, but the angle of ascent is narrowing. This pattern usually signals a bearish reversal, which could indicate further downward pressure on the euro.
Conclusion
As the euro struggles to maintain its recent gains against the US dollar, the focus turns to the upcoming US CPI data and NFP report. With possible inflationary pressures and a tight labor market in the US, the euro may face further bearish pressure. The daily chart also suggests a possible rising wedge breakout, which could signal further downward pressure on the euro. Traders and investors should keep a close eye on these developments and adjust their strategies accordingly.
