EUR/USD found itself in a familiar position on Wednesday following the US Federal Reserve’s decision to keep interest rates steady, as many investors had predicted. However, there was disappointment among market participants who were hoping for indications of possible rate cuts in the near future. Currently, the rate markets are forecasting a single rate cut for the year in November, but are eager for more clarity from the US central bank.
Federal Reserve Chairman Jerome Powell’s speech indicated that it was unlikely for the next policy rate move to be a hike, further fueling speculation about potential rate cuts. Meanwhile, Thursday is expected to be a quiet day in terms of economic data, with the final HCOB Manufacturing Purchasing Manager Index (PMI) figures from Europe being the highlight. With manufacturing accounting for less than a quarter of the European economy, these figures are not expected to have a significant impact on the overall market sentiment.
The focus will shift to Friday’s US Non-Farm Payrolls (NFP) report, which is expected to drive market momentum at the end of the trading week. Market expectations are set at 243K for April, a slight decrease from the previous month. Investors will also closely watch for any revisions to the data, particularly in light of ongoing layoffs in various sectors of the US economy. Additionally, attention will be on Average Hourly Earnings MoM in April, with hopes that wages remain steady at 0.3% amidst concerns about broad-market inflation.
In terms of technical analysis, EUR/USD has been consolidating near the 1.0700 level for the past six trading days. The 200-hour Exponential Moving Average (EMA) is seen as a key midrange level, with potential upper and lower bounds at 1.0740 and 1.0650 respectively. On a daily chart, a near-term support level has been established around 1.0600, while the pair continues to struggle below the bearish side of the 200-day EMA near 1.0790.
Overall, the EUR/USD pair is likely to remain range-bound in the near-term, as investors await further clarity on interest rate policies from the US Federal Reserve. The upcoming US NFP report on Friday is expected to provide more insights into the health of the US economy and could potentially influence market sentiment and trading patterns as the week comes to a close.
