EUR/USD forecast: forex signal ahead of the NFP data

The EUR/USD exchange rate has moved sideways in the past few days as investors wait for the upcoming US non-farm payrolls (NFP) data. The pair was trading at 1.0520, a few points above this month’s low of 1.0445. It has slipped by more than 6.8% from the highest level this year.

The EUR/USD pair has stabilised recently after the latest ADP private payrolls data on Wednesday. The report showed that the private sector added just 89k jobs in September, the smallest increase in months.

Additional data have shown that the American economy is slowing. For example, the manufacturing and services PMI figures dropped at a faster pace than expected in September. And in a report on Thursday, the World Trade Organisation (WTO) warned that global trade, including with the US will continue falling. 

The next important catalyst for the EUR/USD pair will be the upcoming US non-farm payrolls (NFP) data. Economists polled by Reuters believe that the labour market softened a bit in September. Precisely, they expect that the NFP dropped from 187k in August to 170k in September.

Analysts also expect that the unemployment rate remained unchanged at 3.7% in September. The most important figure will be on wages. Average hourly earnings are expected to have grown by 4.3% in the month.

Wage growth will continue in the near term as workers seek increases. UAW workers have asked for a 40% rise while UPS drivers will start earning over $150k per year. Other workers, including those at Kaiser Permanente, have all gone on strike.

A higher-than-expected wage growth number will push the EUR/USD pair as investors bet on a more hawkish Federal Reserve. For one, a higher report means that inflation will likely continue rising.

The EUR/USD exchange rate has been in a bearish trend for a while. It recently moved below the lower side of the ascending channel shown in green. The pair also crossed the crucial support level at 1.0636, the lowest swing on June 1st. It has recently formed a death cross pattern, which is a bearish sign.

Therefore, the outlook for the pair is bearish, with the next level to watch being the psychological level at 1.0400. The alternative is a situation where bounces back and moved above the key resistance at 1.0650.

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