EUR/USD Outlook: Euro Eyes $1.11537 Pivot as Industrial Production Disappoints and NFP Looms
Arslan Butt•Friday, September 6, 2024•2 min read
EUR/USD is trading at $1.11182, up 0.07% in early Friday trading, but recent European economic data has presented a mixed outlook. German industrial production fell by -2.4% month-over-month, significantly below the forecasted -0.4% and well below the prior month’s 1.7% growth.
This decline signals a slowdown in Europe’s largest economy, potentially impacting the euro’s strength in the near term.
Similarly, French industrial production also underwhelmed, dropping by -0.5%, compared to an expected -0.3%.
Trade balances from both Germany and France also missed expectations, with Germany posting a surplus of €16.8 billion (vs. €21 billion forecast), and France reporting a deficit of €5.9 billion.
On the brighter side, Italy’s retail sales offered a more positive note, rising 0.5% month-over-month, beating the forecasted 0.1%. Eurozone-wide employment and GDP figures, set to release later in the day, are expected to come in at 0.2% and 0.3%, respectively.
While these figures show some stability, they may not be enough to offset the weaker industrial production results.
Key Takeaways:
EUR/USD is trading at $1.11182, with immediate focus on breaking resistance at $1.11537.
German and French industrial production data missed expectations, weighing on the euro.
U.S. Non-Farm Employment data and Fed speeches are key drivers to watch for potential volatility.
Technical Analysis: EUR/USD Eyes Key Resistance at $1.11537
Technically, EUR/USD remains in bullish territory as it trades at $1.11182, with the pair holding above key support levels. The immediate focus for traders is the pivot point at $1.11537.
A successful break above this level could lead to further gains, with the next resistance targets at $1.11932 and $1.12302. However, failure to breach the pivot point could trigger a retracement, with immediate support levels found at $1.10717, $1.10337, and $1.09995.
The 50-day Exponential Moving Average (EMA) at $1.10920 is currently providing dynamic support, reinforcing the bullish bias as long as the price stays above it. The Relative Strength Index (RSI) stands at 65, suggesting that while the momentum is moderately bullish, the pair is approaching overbought territory.
A move above 70 on the RSI could signal further upside potential, but traders should be cautious of a correction if the RSI starts to decline.
Given this technical setup, traders may consider entering long positions above $1.11011, with a take-profit target at $1.11549 and a stop-loss at $1.10716. The technical picture remains optimistic as long as EUR/USD holds above the 50-day EMA and the pivot point is respected.
The next major driver for EUR/USD will be U.S. data set for release later in the day. Wall Street will be watching the U.S. Non-Farm Employment Change, with expectations of 164,000 new jobs created in August. Any significant deviation from this forecast could drive volatility in the currency markets.
A lower-than-expected figure may weaken the U.S. dollar, boosting EUR/USD further. In contrast, stronger-than-expected employment data could push the dollar higher, leading to a retracement in the euro.
Other key U.S. data includes the Average Hourly Earnings, which is forecasted to rise by 0.3%, and the Unemployment Rate, expected to hold steady at 4.2%. Additionally, speeches from Federal Reserve officials Williams and Waller could provide further insight into the central bank’s policy outlook, particularly around interest rates.
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.
His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.
His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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