Euro’s Fragile State Faces NFP Test

Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst 

The EURUSD currency pair finds itself in a cautious dance as the euro lingers near its weakest level since November 2022. This fragile state follows remarks from European Central Bank (ECB) officials and the release of US labour market data. ECB member Mario Centeno suggested that the central bank’s interest rate hike cycle may have concluded due to receding inflation in the Eurozone. Market sentiment was further influenced by comments from Cyprus Central Bank Governor Constantinos Herodotou and ECB Vice-President Luis de Guindos. 

However, today’s US nonfarm payrolls (NFP) report holds the key to potential currency movements. A strong NFP could reignite the dollar’s dominance, causing the euro to drop below $1.05, even if the US payrolls meet consensus. Meanwhile, the euro lacks strong domestic impetus, and the Bank of England is expected to maintain rates in November, according to ING analysts. 

Technical Analysis:  

The EURUSD’s 4-hour chart presents an intriguing picture. The current price stands at 1.05634, with bulls attempting to push it higher before the NFP report. The price action sits comfortably below the downward-sloping 100-SMA (red line) but remains above the 50-SMA (blue line). The downward-sloping 100-EMA is positioned below the 50-SMA, suggesting continued bearish sentiment. 

Despite the challenges, the RSI is on the rise, indicating a potential shift in momentum. Short-term trading opportunities could emerge towards the resistance level at 1.05634 if the bulls sustain their push. A successful breakthrough could lead to further gains, targeting 1.06096, with 1.06599 as the next significant level. 

However, failure to maintain the push above the 50-SMA could offer short-term trading opportunities towards the initial support at 1.05021, potentially bringing the 1.04485 resistance level into play. 


The euro remains bearish, with potential downward pressure. However, short-term trading opportunities may arise if the bulls sustain momentum. The 4-hour chart shows a crucial resistance at 1.05634, with further potential at 1.06096. Conversely, a breakdown below the 50-SMA may lead to support at 1.05021, with the possibility of further decline to 1.04485. 

Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire, MT Newswire.