- The EUR/USD forecast indicates a rebound in the dollar after upbeat employment figures.
- Job vacancies in the US exceeded the estimated number.
- Powell did not rule out the possibility of a rate cut at the next meeting.
The EUR/USD forecast indicates a rebound in the dollar after upbeat employment figures in the previous session. However, a growing policy divergence between the Fed and the ECB has kept the pair bullish. The Fed is becoming increasingly dovish and is more inclined to cut interest rates. On the other hand, the ECB seems comfortable with pausing.
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Data released on Tuesday revealed that job vacancies in the US exceeded the estimated number. The JOLTS job openings rose to 7.77 million, compared to the forecast of a drop to 7.32 million. More vacancies are a sign that demand for labor is strong. The report eased worries of a rapid slowdown in the labor market. However, market participants are more eager to see the results of the nonfarm payrolls report for more clues on Fed policy.
Meanwhile, recent speeches from Powell have revealed a more dovish tone. On Tuesday, the Fed Chair did not rule out the possibility of a rate cut at the next meeting. The slowdown in the economy has gradually increased pressure on the central bank to cut interest rates.
On the other hand, ECB’s Madis Muller said on Tuesday that the central bank can afford to pause for now. Inflation in the Eurozone has reached the 2% target, and growth is rebounding.
EUR/USD key events today
- ADP Non-Farm Employment Change
EUR/USD technical forecast: RSI divergence signals likely pullback
On the technical side, the EUR/USD price has paused near the 1.1800 key psychological level after making new highs in the bullish trend. The price trades above the 30-SMA, and the RSI is above 50, suggesting a bullish bias.
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The price has maintained a bullish trajectory, making higher highs and lows despite chopping through the 30-SMA. Nevertheless, the price has remained above a bullish trendline. The most recent swing came from the trendline, broke above the 1.1600 key level, and reached the 1.1800 resistance.
However, at the new high, the price has shown some weakness. The RSI has made a bearish divergence. If this plays out, the price will likely drop below the 30-SMA to retest the 1.1600 level or the bullish trendline. Otherwise, bulls will break above 1.1800 to make new highs.
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