EUR/USD Analysis: EUR/USD Stable Ahead of US Data – 30 September 2024

-- Around last week’s closing levels, the Euro against the US Dollar EUR/USD is stable at the beginning of trading in an important week led by the announcement of US jobs figures and statements by the US Federal Reserve Governor Jerome Powell.
-- Prior to that, the Euro Dollar EUR/USD is stable around the 1.1170 level.
-- Moreover, the currency pair remains in an advanced position since the US Federal Reserve’s deeper interest rate cut.

EUR/USD Technical analysis and forecast:

This week, the appetite of policymakers at the Federal Reserve to cut US interest rates may become clearer as the bank’s Governor Jerome Powell addresses economists and the government releases new employment figures. The Fed Chairman will discuss the US economic outlook at the National Association for Business Economics conference on Monday. At the end of the week, the US jobs report for September is expected to show a healthy and moderate labor market.

According to the results of the economic calendar, Payrolls in the world’s largest economy are expected to rise by 146,000, based on the median estimate in a Bloomberg survey of economists. That’s similar to the increase in August and would leave the three-month average of job growth near its weakest since mid-2019. The unemployment rate is likely to remain at 4.2%, while average hourly earnings are expected to rise 3.8% from a year earlier.

Meanwhile, the recent labor unrest suggests Friday’s jobs report could be the last clean reading on the U.S. labor market before the Federal Reserve meets in early November. Boeing Co. workers walked off the job in mid-September, and dock workers on the Atlantic and Gulf coasts are threatening to strike starting Oct. 1. In addition to the heavyweight monthly payrolls report, Tuesday’s job openings data is expected to show that job openings in August remained near their lowest level since the start of 2021. Also, economists will be looking at the rate of resignations and layoffs to gauge the extent of the slowdown in demand for labor.

Euro expected to return below $1.10

In this regard, Deutsche Bank says the EUR/USD exchange rate will undergo a “soft landing” in the United States. According to a new research note from Deutsche Bank’s currency analysis team, this means the euro exchange rate will return below $1.10. “The US has succeeded in securing a perfect soft landing – that is the dominant theme in our foreign exchange chart. There are many trade implications from this,” explains George Saravelos, a forex expert at Deutsche Bank.

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;The “perfect soft landing” is a scenario in which the Federal Reserve succeeds in reducing inflation by raising interest rates but does not exhaust the economy’s energy and cause a recession. The analyst believes the Fed will likely continue to cut rates, but not as much as has been priced in and the dollar will remain high yielding. The dollar has been on a downward trajectory recently as markets have priced in the start of a rate-cutting cycle, which began in September with a massive 50 basis point rate cut. But “so the dollar is not about to enter a new bear market, and we like to see the recent dollar sell-off fade across the EUR/USD,” the analyst said. Then there’s Germany. “In Europe, the German economy is going through a negative competitive shock and the euro has historically been unable to rally when the German economy is very weak,” the analyst said.

The German economy appears to be in recession, according to survey data for September, and analysts say that will put pressure on the European Central Bank to cut rates again before too long. Among this group is the Deutsche Bank economics research team, which believes the European Central Bank could cut interest rates by 50 basis points before the end of the year.

Also, the team believes the ECB could step up the pace of cuts in 2025 from quarterly to consecutive.

In the near term, the US election will become a more important issue for forex markets. According to the analyst, “The US election looms as the big event on the horizon. This has a lot of potential to shake the market out of its current order, and the outcome will play a major role in adjusting our views going into 2025.

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Original Source DailyForex.com provides daily fundamental and technical analysis and signals for those looking to trade based on trends in the currency markets.