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How Will US NFP and German Inflation Impact EUR/USD After Breaking 1.1600 Support?
Highlights
- Mild September conditions across much of western and southern Europe will decrease heating demand. This weather will give the region essential relief to help restore its natural gas inventories, which are currently at a low 65% capacity ahead of winter.
- Since markets are monitoring the US labor market data such as US Unemployment Rate and US Non-Farm Payrolls, which will determine the Federal Reserve’s rate expectations.
- For the Eurozone sentiment, macro data remain steady with the European Central Bank relying on data providing a safety net for the Euro.
- For indicators, with current German inflation as it edged up to 2.9% for the month of August from previous 2.8% in July driven by rising energy costs and geopolitics.
- This rapid increase pressure the ECB or European Central Bank to implement another interest rate hike. This week, Eurozone’s Retail Sales and Germany Factory Orders will have significant impact on the pair and on track as the consumer and business sentiment remain resilient within the region despite lower expectations.
- The region’s second quarter economic growth exceed initial forecasts while business confidence reached a peak unseen since the onset of the Iran conflict and pertinent issues relevant to the Strait of Hormuz, pointing toward a delayed recovery.
- With this positive momentum contrasted with a steep decline in production across energy-heavy sectors by March 2026 with industries such as glass, ceramics, and stone processing though petroleum refining stood out as a strong exception.
KEY DRIVERS TO PRICE MOVEMENTS
Economic indicators from the United States and the Eurozone. See economic calendar below.
Eurozone indicators
Source: Finlogix
United States indicators
Source: Finlogix
Since European region depend heavily on foreign energy or as a heavy energy importer, skyrocketing oil prices erode the region's trade balance as a result creating a structural headwind for the Eurodollar while driving safe-haven capital into the US Dollar. Increasing crude costs hit Europe's terms of trade hard, dragging down the Eurodollar while supporting the US Dollar through safe-haven flows.
Source: Bloomberg
TECHNICALS
Source: ACY
We can see based from the Daily chart that the pair EURUSD has breached the 1.16000 barrier now as the resistance. It moves from cautiously bearish to neutral since markets anticipate the upcoming U.S. labor market data.
Resistance Levels
- 1.1708 remain as major resistance
- 1.16374 previous support now as resistance
Support Levels
- 1.15670
- 1.15565
Relative Strength Index at 62.36 illustrating that prior aggressive bullish momentum is setting.
Below is an example of US Non-Farm Payrolls data initial release based from the 60-minute chart with its initial reaction from below the market forecast figures.
Source: Finlogix
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