EURUSD exchange rate is becoming stable on Wednesday after a weekly downtrend. Investors are waiting for the monthly report on employment in the United States. This statistic may influence the Federal Reserve System’s (Fed) decision on the pace and depth of interest rate cuts this year.
Economists interviewed by Reuters forecast the US Non-Farm Payrolls to increase by 165 000 jobs in August. That’s up from July’s reading of 114 000. Before that, the key data will be the US jobs report on Wednesday and the ADP employment report on Thursday.
According to CME’s FedWatch tool, traders see a 41% chance of a 50 basis point interest rate cut at the Fed’s Sept. 18 meeting, and 59% chance of a 25 basis point reduction.
As for European statistics, on Thursday, traders’ attention will be focused on the update of retail sales data for July in EU.
Economists expect EU retail sales to recover slightly in the year to July, with a projected 0.1% increase compared to the previous period’s 0.3% decline. Europe GDP figures are also released on Friday. Market participants forecast the indicator to hold steady for the second quarter.
At the technical level, EURUSD quotes on the D1 chart are in a wide correction corridor. Prices, having broken away from the trend resistance line, rushed to the opposite boundary of the uptrend. The Relative Strength Index (RSI) indicator divergence (standard values) is already playing out its significance and indicates a decline in the exchange rate within a broad correction.
Signal:
The short-term outlook for EURUSD is to sell.
The target is at the level of 1.0760.
Part of the profit should be fixed near the level of 1.0920.
The Stop-loss could be placed at the level of 1.1260.
The bearish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.
