US Unemployment claims increased to 231,000 in the previous week, surpassing expectations. Market analysts are now predicting two Federal Reserve cuts in 2024, with the first likely to occur in September. The upcoming week will see the release of wholesale and consumer inflation reports in the US.
The EUR/USD pair had a slightly bullish week due to dollar weakness. Poor nonfarm payrolls report and downbeat employment data from the US contributed to this trend. The rising unemployment claims suggest a weakening labor market, leading to increased expectations of Fed rate cuts.
Next week, investors will closely watch the release of wholesale and consumer inflation reports in the US, along with the retail sales report. These data points will provide valuable insights into the possibility of Fed rate cuts, especially amidst recent signs of economic slowdown. A decline in retail sales could indicate further economic deterioration, prompting the Fed to consider rate cuts in September.
On the technical side, the EUR/USD price is currently trading above the 22-SMA, with bullish momentum supported by the RSI above 50. However, the overall trend remains downward as the price continues to make lower highs and lows. Bulls are currently testing a resistance trendline, and a breach of this level could strengthen the bullish bias. Conversely, failure to break above the trendline may lead to a retest of the 1.0601 support level.
In conclusion, the EUR/USD pair is facing challenges as it navigates key resistance levels and economic data releases. Traders should closely monitor developments in the labor market, inflation reports, and retail sales to gauge the potential impact on Fed rate decisions.