NFP Beats Expectations, Eyes Turn to Inflation Data
EUR/USD Runs Out of Steam. Double Top Warns of Uptrend Exhaustion
The U.S. labor market added 139K new jobs last month, surpassing the expected 126K and boosting the US Dollar against most of its major peers. The Euro slipped below the 1.1400 mark against the greenback and the European Central Bank (ECB) cut the rate in line with expectations.
ECB President Lagarde signaled that the rate cut cycle is likely approaching its end. According to ECB policymakers, the Eurozone managed to achieve a soft landing but some uncertainty persists, especially due to the tariff situation.
Regarding tariffs, President Trump and Chinese leader Xi spoke last week and both of them characterized the call as positive. Negotiations will continue early this week as Treasury Secretary Scott Bessent and other U.S. representatives meet with their Chinese counterparts. According to Trump “The meeting should go very well” but that remains to be seen.
Economic Calendar Highlights
There are only a few releases set for the week ahead but they are potential market movers and with a strong impact on future price action. The always-important U.S. Consumer Price Index (CPI) is set for release on Wednesday at 12:30 pm GMT. The yearly figure is expected to show a change of 2.5%, higher than the previous 2.3%. The Core CPI (monthly) is expected to change 0.3% (previous 0.2%).
Thursday at 12:30 pm GMT we take a look at the U.S. Producer Price Index (PPI), which has inflationary implications because changes in the price charged by producers will be eventually reflected in the price paid by consumers.
The last event of the week will be the release of the U.S. Consumer Confidence survey and Inflation Expectations survey. Both are scheduled for Friday at 2:00 pm GMT.
Technical Outlook – EUR/USD.
The pair hit the resistance at 1.1500 on Thursday and was rejected once again, effectively creating a double top. This bearish chart pattern warns of a deeper pullback or even the end of the uptrend.
The Relative Strength Index (RSI) is not yet overbought but it broke its 70 level last time the pair challenged 1.1500 resistance. This creates a form of bearish divergence which further increases the chance of a move south.
The first support is represented by the bullish trend line drawn from the beginning of the current uptrend. A break of this line will bring in more dollar bulls (EUR/USD sellers), thus driving the pair lower. The next major support is located at 1.1200. Rumors or news about the tariff negotiations or about the Trump – Musk feud will surely affect the greenback in special and the Forex market in general.
