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EUR/USD Forecast Ahead of EU Retail Sales and US NFP Data

The EUR/USD pair tilted lower on Friday morning as investors waited for the latest EU retail sales and US nonfarm payrolls (NFP) data. The pair is trading at 1.2937, which is slightly lower than this week’s high of 1.1382. 

The EUR to USD price has been in the spotlight this week after the Fed Chair testimony. In his submissions, the Fed chair hinted that the bank will start tapering at a faster pace than expected. This means that the bank will abandon its quantitative easing policy in the first quarter. He also reiterated that the bank will abandon its opinion that the current inflation growth was transitory.

The pair will react to the latest US NFP data that will come out later today. Analysts expect that the data will show that the economy created more than 500k jobs in November. This will be the second straight month that the economy has added more than 500k jobs. At the same time, analysts expect that the unemployment rate fell to 4.5% while wages rose to 5.0%.

The EUR/USD will also react to the latest Eurozone retail sales numbers. Data by Eurostat is expected to show that the bloc’s retail sales rose by about 1.2% in October. This was a slight decline from the previous month’s 2.5%. Still, analysts believe that the divergence between the Fed and the European Central Bank (ECB) will keep widening.

EUR/USD forecast

On the two-hour chart, we see that the EURUSD pair has been in a relatively tight range recently. The pair is trading slightly above the woodie pivot point. It has also moved slightly lower than the 25-day and 50-day moving averages while the MACD is still slightly below the neutral level. It has also formed a small head and shoulders pattern.

Therefore, I suspect that the pair will keep falling as bears target the second support at 1.1100. This view will be invalidated if the price moves above the key resistance at 1.1345.