EUR/USD prediction ahead of the US NFP data

By: Crispus Nyaga
Crispus Nyaga
Crispus is an active trader, where he is followed and copied at Capital.com. He lives in Nairobi with his… read more.
on Oct 7, 2021
  • The EUR/USD pair stabilised in the overnight session.
  • The Senate is nearing a deal to avert an American debt crisis.
  • The next key catalyst will be the American NFP data.

The EUR/USD pair stabilized after positive signs that the US will avert a debt crisis and as investors waited for the upcoming non-farm payrolls. The pair is trading at 1.1555, which was slightly above this week’s low of 1.1530. It is also about 3% below the highest level in September.

Debt ceiling debate

The EUR/USD collapsed to a multi-month low of 1.1530 as investors worried about the American debt ceiling. Now, there are signs that the risk of an American government default is close to being averted. 

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Senator Mitch McConnel said that he will allow Democrats to temporarily lift the debt ceiling until December this year. Still, there is a possibility that the country will default in the coming months if Democrats can’t find a way to lift the ceiling using a process known as reconciliation.

The pair is also reacting to the latest numbers that showed that European economic growth is slowing down. Data published on Wednesday showed that the German factory orders declined by 7.7% in August after rising by 4.9% in the previous month. This decline was worse than the median estimate of -2.1%.

Additional data showed that the Spanish industrial production declined from 3.3% in July to 1.8% in August. These numbers came a day after Markit numbers showed that the region’s services sector was starting to slow down as well.

The biggest catalyst for the EUR/USD will be the latest American jobs numbers. On Wednesday, data by ADP Institute showed that the country’s economy added more than 548k jobs in September. This number was better than what most analysts were expecting.

The US will release its initial and continuing jobless claims numbers on Thursday. The most important will be the NFP data on Friday. The data is expected to show that the country added more than 600k jobs in September while the unemployment rate declined to 5.1%.

EUR/USD forecast

EUR/USD

The four-hour chart shows that the EUR/USD pair stabilised slightly in the overnight session. Still, it remains below the key resistance level at 1.1663, which was the lowest level in August. The pair also remains below the short and longer-term moving averages. The MACD is also below the neutral level. 

Therefore, the pair will likely have a relief rally because the default risks eased in the overnight session. The next key level to watch will be at 1.1600.

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