EUR/USD: Weak Labor Market Data Could Catapult the Pair Toward 1.12 Barrier
2024.09.05 08:53
traders are closely monitoring this week’s U.S. economic data as recession concerns grow. With the critical jobs report in focus, the direction of the pair hinges on how the data shapes around the size of the first rate cut by the Fed.
The , released yesterday, highlighted a slowdown in economic activity across the country. Meanwhile, the report showed a drop in job openings from 7.91 million to 7.67 million, hitting the lowest level since January 2021.
These data points have cast doubt on the idea of a soft landing for the economy. As a result, markets quickly began the odds of a 50 basis point Fed rate hike this month. The , which had partially recovered to the 102 level last week, slipped by half a point to around 101.2 this week.
The data slate remains packed today, with a slew of data to be released ahead of tomorrow’s and reports.
With market sentiment still highly sensitive to growth signals, tomorrow’s employment data will play a critical role in guiding the next direction for the EUR/USD pair.
Technical View: EUR/USD
EUR/USD hit a yearly high of 1.12 at the end of August, and the pair has since found support around 1.105 this week as critical economic data continues to roll in. Yesterday, demand for the euro lifted the pair back to 1.1075, signaling renewed strength.
If upcoming data confirms further weakening in the labor market, recession fears may grow, potentially driving EUR/USD higher towards the 1.12 level, especially if it breaks above 1.1125 with strong momentum.
On the other hand, strong employment data could ease recession concerns, shifting focus back to the Fed’s anticipated 25-basis-point rate cut. In this scenario, EUR/USD might break below 1.1025, opening the door for a potential decline towards 1.09.
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