EUR/USD Forex Signal: Rebound Anticipated Before US Jobs Data
By Crispus Nyaga
Crispus Nyaga, a seasoned financial analyst, coach, and trader with over 8 years of experience, has worked for renowned companies such as ATFX, easyMarkets, and OctaFx. He has also contributed widely to platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, Nyaga enjoys golf and spending quality moments with his family.
Bullish Outlook:
- Buy the EUR/USD pair, targeting a take-profit at 1.2000.
- Implement a stop-loss at 1.1700.
- Estimated timeframe: 1-2 days.
Bearish Perspective:
- Sell the EUR/USD pair, setting a take-profit at 1.1700.
- Place a stop-loss at 1.2000.
The EUR/USD exchange rate experienced a sharp decline following Donald Trump's selection of Kevin Warsh as the next Federal Reserve Chairman. This move caused the rate to drop to 1.1850, contrasting the previous month's high of 1.2080.
Kevin Warsh's Hawkish Reputation:
Kevin Warsh, a former Federal Reserve official, has been nominated by Trump to lead the central bank when Jerome Powell's term concludes in May. Warsh's hawkish stance on interest rates is well-documented, as he has previously criticized the Fed's quantitative easing policies and early interest rate cuts.
Despite Trump's disagreement with Powell on interest rate reductions, Warsh's potential early rate cuts could be seen as a Trump-aligned move, inviting scrutiny. Conversely, maintaining a hawkish stance might provoke Trump's displeasure.
Key Catalysts:
The EUR/USD exchange rate's next significant turning point will be the US manufacturing PMI data, scheduled for release later today. Economists predict a slight increase in the PMI from 51.8 to 51.9 in January.
Additionally, the market will react to a statement by Raphael Bostic, a prominent Federal Reserve official. Later this week, the US will also release crucial macro data, including the January jobs figures.
The EUR/USD pair will further respond to the upcoming European consumer inflation report, which is expected to reveal a 1.7% price drop in January. Analysts anticipate the European Central Bank (ECB) to maintain current rates and initiate hikes in 2026.
EUR/USD Technical Analysis:
The daily chart indicates that the EUR/USD exchange rate has retreated in recent days, falling from 1.2080 to the current 1.1850.
Notably, the pair has remained above the Supertrend indicator and both the 50-day and 100-day Exponential Moving Averages (EMAs).
Therefore, a rebound is likely later this week. If this occurs, the 1.2000 psychological level will be a critical observation point.
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