US Jobs Data Supports Dollar, Limits Euro Gains (09.10.2024)

The EUR/USD pair rebounded slightly from a one-week low on persistent USD strength, driven by market reactions to a mixed US jobs report. The dollar's rise has limited gains for the euro, as investors shift their expectations for a September Fed interest rate cut. The prediction of further easing by the ECB is also keeping the euro under pressure. Meanwhile, the yen retreated from recent highs as the dollar advanced, and gold remained stable near $2,500 per ounce as traders await US inflation data. Silver stabilized at $28.3, with key technical levels in focus, as global economic updates continue to affect market sentiment.

EUR/USD Rebounds Slightly, USD Strength Persists

The EUR/USD pair has slightly rebounded from a one-week low, trading around the 1.1030-1.1025 range during the Asian session on Tuesday, briefly ending a two-day losing streak. Any significant appreciation still appears limited due to the ongoing US Dollar (USD) strength. Following the release of a mixed US jobs report on Friday, investors have scaled back their expectations for a 50 basis point interest rate cut by the Federal Reserve in September. This shift has bolstered the Greenback for the third consecutive day, bringing it closer to the monthly peak reached last week, which acts as a headwind for the EUR/USD pair. The euro's relative weakness is also attributed to rising market expectations that the European Central Bank (ECB) may cut interest rates again in September, given declining inflation in the Eurozone. This potential for additional ECB easing might further cap the EUR/USD pair, although the downside is expected to be limited ahead of key data and central bank events later this week. The latest US consumer inflation figures are set to be released on Wednesday, followed by the US Producer Price Index (PPI) on Thursday. These reports will be crucial in shaping market expectations for the Fed's rate cut decision later this month and will influence USD demand. Additionally, the ECB's policy decision on Thursday will provide a new direction for the EUR/USD pair.

The first support level is at 1.1030 for the EUR/USD pair. If this level is breached, the next supports to watch will be 1.1000 and 1.0950. On the upside, the first resistance is at 1.1060; if this level is surpassed, the next targets will be 1.1100 and 1.1150.

Yen Retreats from Recent Gains

The Japanese yen fell below 143 per dollar on Monday, retreating from gains made last week as the dollar strengthened before the US inflation data. Traders have reduced expectations for a larger Fed rate cut this month following a mixed August jobs report. Analysts warn that a more aggressive move could mislead the markets. Last week, the yen surged nearly 3% and reached an almost year-to-date high on hopes that the Bank of Japan might increase rates further, driven by solid economic growth, rising wages, and persistent inflation. However, final data revealed that Japan's economy grew at an annualized rate of 2.9% in the second quarter, slightly below the preliminary figure of 3.1% and market expectations of 3.2%.

From a technical perspective, the first resistance level is at 143.40. If this level is surpassed, the next targets will be 144.40 and 145.00. On the downside, the initial support is at 142.70; if this level is breached, the next support to watch will be 141.70 and 141.00.

Mixed US Jobs Data Supports Gold Prices

Gold remained steady near $2,500 per ounce on Monday. Last week's data revealed that US employment growth in August fell short of expectations, but the decline in the jobless rate to 4.2% and consistent wage growth suggested that the labor market remains relatively strong, which might reduce the need for a more significant rate cut. Traders now foresee a 73% chance of a 25-basis-point reduction at next week's Fed meeting and a 27% chance of a 50-basis-point cut, according to the CME FedWatch tool. A less restrictive monetary policy is generally favorable for gold, as it lowers the opportunity cost of holding non-interest-bearing bullion. The US Consumer Price Index (CPI) for August is set for release on Wednesday, followed by the Producer Price Index (PPI) report on Thursday.

Technically the first support level is at 2,470. If this level is breached, the next supports to watch will be 2,430 and 2,400. On the upside, the initial resistance is at 2,508; if this level is surpassed, the next targets will be 2,530 and 2,550.

GBP/USD Falls as US Dollar Strengthens

GBP/USD extended its losing streak for the third consecutive day, trading around 1.3060 during the Asian session on Tuesday. The decline can be attributed to the strengthening US dollar, which has gained support following recent US labor data that has cast doubt on the likelihood of a more aggressive interest rate cut by the Federal Reserve at its September meeting. According to the CME FedWatch Tool, markets are currently pricing in at least a 25 basis point (bps) rate cut by the Federal Reserve in September. However, the chance of a 50 bps cut has slightly decreased to 29.0%, down from 30.0% a week ago.

Federal Reserve Bank of Chicago President Austan Goolsbee noted on Friday that Fed officials seem to be aligning with market sentiment that a policy rate adjustment by the Fed is imminent, as reported by CNBC. In the UK, investors are eagerly awaiting the release of employment data for the quarter ending in July, scheduled for Tuesday. This labor market report is expected to significantly influence market expectations regarding the Bank of England’s (BoE) interest rate decisions for the rest of the year.

For GBP/USD, the initial support lies at 1.3040, followed by 1.3000 and 1.2950 below. On the upside, the first resistance is at 1.3100, with subsequent levels at 1.3140 and 1.3190 if the pair breaks above this resistance.

Silver Steady at $28.3, Awaiting US Inflation Report

Silver stabilized around $28.3 per ounce on Tuesday after recent volatility. The mixed US jobs report for August did little to clarify the future path of rates, although Fed officials such as Christopher Waller and John Williams have expressed support for an initial rate reduction at the upcoming meeting. Traders now estimate a 71% likelihood of a 25 basis point cut next week and a 29% chance of a 50 basis point cut, according to the CME FedWatch tool. Meanwhile, concerns about a possible US recession and economic uncertainties in China, a major consumer, continue to weigh on commodity markets.

From the technical perspective, the first resistance is at the 28.70 level. If silver breaks above this level, the next resistance levels to watch will be 29.00 and 29.50, respectively. On the downside, the initial support level is at 27.70, with subsequent support levels at 27.20 and 26.70.