The EUR/USD price pulled back sharply on Thursday as focus shifted to the upcoming US non-farm payroll (NFP) data. It dropped to a low of 0.9826, which was the lowest level since October 4. It has dropped by more than 1.8% from its highest level this week.
US jobs data ahead
The main theme in the financial market this week was on the possibility of a Federal Reserve pivot. After the Reserve Bank of Australia (RBA) started pivoting this week, most analysts believe that other banks will do the same. Besides, the Fed has become the most hawkish it has been in decades.
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Economic data published this week showed that the American economy is still significantly strong and that it can handle several rate hikes. For example, non-manufacturing PMI data published on Wednesday revealed that the sector is firing on all cylinders.
In addition, private payrolls data published by ADP revealed that employers added over 205k jobs in September. That was an improvement from the jobs that they created in the previous month.
The next key forex news that will have an impact on the EUR/USD exchange rate will be the upcoming NFP data scheduled for Friday. As we wrote in this report, economists polled by Reuters expect the data to show that the American economy added more than 265k jobs in September after it added 308k in August.
They also expect the numbers to show that the unemployment rate remained unchanged at 3.7% in September. In addition, analysts believe that the average weekly hours remained intact at 34.5 while the average hourly earnings dropped from 5.2% to 5.1%.
If analysts are accurate, it means that the Fed has more room to continue hiking interest rates. Indeed, in a statement, Fed’s Neel Kashkari said that he was not comfortable pausing rates until he saw evidence of inflation cooling.
EUR/USD forecast
The EUR/USD pair pulled back sharply after the hawkish statement by Neel Kashkari. It moved below the important support level at 0.9862, which was the lowest level on September 6. The pair has managed to move below the 25-day and 50-day moving averages.
After moving to the overbought level, the Relative Strength Index (RSI) has moved below the neutral point at 50. The MACD has continued falling. Therefore, the pair will likely continue falling as sellers target the next key support at 0.9700.
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