ECB Sentiments vs. US Jobs: Impact on EUR Base Rate

ECB Sentiments vs. US Jobs: Impact on EUR Base Rate

On Wednesday, the EUR base rate experienced a 0.18% decline, extending Tuesday’s 0.12% drop. The day closed with EUR/USD at $1.06605 (100 EUR to USD standing at $106) after reaching a high of $1.07368 and a low of $1.06500.

Focus on French Business Confidence and ECB

French business confidence is in the spotlight, with economists predicting a rise in the Business Confidence Index from 96 to 97. This could alleviate concerns over business investment and hiring, supporting the French economy. The impact of ECB monetary policy moves on business sentiment will also be crucial in shaping market sentiment and the EUR base rate.

US Jobless Claims and Philly Fed Index: Critical Indicators

Thursday will highlight US initial jobless claims and the Philly Fed Manufacturing Index. An increase in jobless claims might question FOMC projections for unemployment, potentially impacting the US economy. Weaker labour market conditions would weigh on spending and impact the US economy, where private consumption accounts for over 65.00% of GDP.

ECB President Lagarde’s Influence

Late in the session, ECB President Lagarde and ECB Executive Board member Isabel Schnabel are on the calendar to speak. Lagarde will have more influence on the EUR base rate. A deviation from the Thursday press conference script would direct the EUR/USD.

EUR/USD Forum: Short-Term Forecast

Monetary policy and economic divergence favour the dollar, with a cautious outlook for the euro area. Steady labour market conditions and a grim economic outlook for the euro area might lead to further EUR/USD downside. However, a spike in jobless claims could pose a risk to the dollar. The dollar remains at risk of a stumble on a spike in jobless claims, indicating a degree of uncertainty in the market.

EUR/USD Price Action

The EUR swap rates remain below the 50-day and 200-day EMAs, indicating a bearish sentiment. A break below the $1.06342 support level might lead to a move towards sub-$1.06. A return to $1.07 would require hawkish ECB speeches and a spike in jobless claims. Better-than-expected US economic indicators would support the Fed rate path projection and the EUR/USD trajectory, potentially stabilizing the market.

4-Hour Chart EUR/USD Technical Analysis

The EUR base rate is positioned below the 50-day and 200-day EMAs, affirming the bearish signals. Breaking above the 50-day EMA could lead to a move towards the $1.07635 resistance level. Conversely, a break below the $1.06342 support level could push towards sub-$1.06. The 14-period 4-hourly RSI suggests a potential break below the $1.06342 support level before entering oversold territory, indicating the need for cautious market observation.