EUR/USD traded lower on Tuesday, falling to a 4-session low of 1.0769 despite U.S. JOLTS data indicating a slowdown in job growth. September’s JOLTS print came in at 7.443 million, well below August’s revised 7.861 million and lower than even the most conservative forecasts. While the weak data briefly pressured U.S. yields and the dollar, this effect was limited as investors shifted their focus to rising inflation concerns, highlighted by upward trends in U.S. 5-year break-even inflation rates and inflation-linked swaps. These inflation indicators suggest the Fed may follow a shallower rate-cutting cycle than previously anticipated, maintaining the dollar’s strength against the euro.
Technically, EUR/USD faces continued bearish pressure, with the pair trading below its 5-day moving average and falling RSI levels indicating a downtrend. The consolidation phase persists, and despite Tuesday’s brief rally off the lows, the broader outlook remains bearish as long as the pair holds below 1.0825. Immediate support is seen at 1.0760, with any break below this level likely to accelerate downside toward the 1.0700 psychological level. On the upside, resistance lies at 1.0826, and a break above this could signal a potential reversal, though such a move would likely require a substantial softening of U.S. inflation expectations or a dovish shift from the Fed.
Looking forward, EUR/USD is likely to remain under pressure as the market anticipates the upcoming U.S. September PCE and October payrolls data. An above-estimate PCE reading on Thursday could fuel inflation fears, reinforcing the dollar’s strength as investors price in a less aggressive Fed rate-cutting cycle. Meanwhile, as the ECB is expected to remain dovish due to tepid European economic growth, the divergence in central bank policies could sustain EUR/USD’s downward trend, with bears aiming for support near the 1.0700 level if bearish sentiment prevails.