The EURUSD pair continues to rise and extends buying pressure above 1.0900. The milder Greenback supports the major pair's upswing following the release of dismal US jobs statistics.
The Weaker NFP Boosted USD Bears
Fears of a wider economic downturn were stoked by the United States' slower-than-expected employment growth and growing unemployment rate, which also hurt the US dollar (USD). According to Labour Department data released on Friday, nonfarm payrolls (NFP) rose by 114,000 in July, less than the estimated 185,000 and a decrease from the downwardly amended 179,000 in June.
Furthermore, the unemployment rate increased marginally to 4.3%, the highest level since October 2021.
Federal Reserve (Fed) Chair Jerome Powell stated this past week that the Fed's confidence in the "solid" economy and softening inflation statistics are growing expectations that the Fed could drop rates soon, despite some concern of an economic downturn in the US.
The CME FedWatch Tool indicates that financial markets have completely priced in a rate drop of a minimum 25 basis points (bps) at each of all three Fed meetings that are still scheduled for this year.
A Rate Cut Knocks By the Fed
In the other direction, the market's expectations for additional interest rate reduction this year were tempered by the high level of inflation and the Eurozone economy's stable growth.
In July, the headline HICP increased to 2.6% YoY, above the 2.4% consensus estimate of economists. Against estimates of 2.8%, the core HICP, which does not include volatile goods like food, energy, alcohol, and tobacco, increased consistently at a rate of 2.9%.
EURUSD Forecast Technical Analysis
In the daily chart of EURUSD, a potential bullish breakout is visible, with the current price trading above the crucial triangle resistance. Moreover, the rising moving average supports the buying pressure, while the current 100-day Simple Moving Average is below the current price with a bullish slope.
In the volume structure, the most active level since November 2023 is at 1.0840 level. As the current price trades above this line with a bullish breakout, we may consider the upcoming market trend as bullish.
Moreover, the potential inverse Head and Shoulders breakout with a valid retest suggests a confluence bullish factor for this pair.
Based on this outlook, a bullish continuation is possible, where the main aim is to test the 1.1100 key level. On the other hand, a minor downward correction towards the 1.0900 to 1.0750 zone with a valid bullish rebound could offer another long opportunity. A break below the 1.0700 level with a valid bearish exhaustion from the 1.0900 level might create a bearish signal, aiming for the 1.0500 area.
