EUR/USD is experiencing modest increases, hovering around 1.1615 during the early hours of the Asian session on Monday. In August, the US Non-Farm Payrolls increased by 162,000, with the Unemployment Rate remaining unchanged at 4.1%. The ECB is anticipated to implement a second rate increase in September. The EUR/USD pair exhibits slight increases around 1.1615 in the early hours of the Asian trading session on Monday. However, the potential upside for the major pair may be constrained in light of a stronger-than-anticipated U.S. August Nonfarm Payrolls report. US markets will remain closed on Monday in observance of Labour Day.
US Nonfarm Payrolls increased by 162,000 in August, compared to an upwardly revised rise of 21,000 in July, as reported by the US Bureau of Labour Statistics on Friday. This figure exceeded expectations of 56,000. Furthermore, the Unemployment Rate remained unchanged at 4.1% in August. Financial markets have increased expectations for a rate hike at the US Federal Reserve’s September meeting, which could strengthen the US dollar against the Euro. Traders are currently assigning approximately 58.3% probability to a 25 basis points rate increase at the Federal Reserve’s September meeting, an increase from roughly 50.2% prior to the data release, as indicated by the CME FedWatch tool. “The American labor market is in good condition heading into the end of the year,” said Joe Brusuelas. “The data does lend support to the hawks at the Fed who are growing impatient with inflation,” Brusuelas added.
The focus will turn to the European Central Bank meeting on Thursday. The ECB is poised to increase interest rates at its forthcoming policy meeting, which would elevate its deposit rate by a quarter-point to 2.50%, as indicated by a Reuters poll released on Thursday. Nordea’s strategists contend that the primary concern for the Dollar at this juncture extends beyond the Fed’s imminent decision; it revolves around the manner in which the central bank articulates its policy trajectory moving forward. They emphasise that “the more important question for the dollar is whether the Fed signals that September marks the start of a tightening cycle or merely a one-off adjustment,” with market reaction likely to depend on whether policymakers clearly indicate an extended series of hikes or a more limited recalibration.
In the daily chart, EUR/USD exhibits a slight bullish inclination as it operates above the 100-day moving average and the Bollinger middle band, indicating a propensity for dip-buying activity just below the current level. The Relative Strength Index (14) at 55.3 remains in neutral-positive territory, suggesting that upside momentum is favourable but not yet excessive. On the topside, initial resistance emerges at the Bollinger upper band around 1.1710, where recent rallies could encounter supply. On the downside, immediate support is observed at the Bollinger middle band near 1.1612, followed by the 100-day moving average at 1.1565; a deeper pullback would reveal the lower Bollinger band support close to 1.1515.
