The euro‑dollar pair was quoted near 1.1627 on Tuesday following a US jobs report that showed non‑farm payrolls rising by 162,000 in August, well above the 56,000 forecast. The unemployment rate held at 4.1% and average hourly earnings increased 3.1% year‑on‑year, while the BLS revised June and July figures upward by a combined 55,000. The stronger‑than‑expected labour market lifted the probability of a Federal Reserve rate hike in September to about 58%, up from roughly 52% before the data, supporting the dollar and keeping EUR/USD in a narrow range.
Attention now turns to the European Central Bank’s policy meeting on 10 September. All 65 economists surveyed by Reuters expect a 25‑basis‑point increase in the deposit rate to 2.50%, a move that is already priced in by money markets. The analysis notes that markets also anticipate the deposit rate to rise to around 3.00% by June 2027, implying two further hikes after this week. With the decision itself largely priced in, the euro’s next move will depend on the post‑decision press conference. Eurozone inflation accelerated to 3.3% in August, driven mainly by energy costs, and ECB President Christine Lagarde has flagged the energy shock as an upside risk to prices.
The analysis suggests that if Lagarde signals that further tightening remains under discussion, the euro could find support and test the upper edge of its current range at 1.1655. Conversely, a neutral stance that leaves policy options open could keep the pair on the downside, with the next key level at 1.1525.
German factory orders added a second layer of context. New orders rose 2.5% in July, far exceeding the 0.3% market expectation, marking the third consecutive monthly increase. However, domestic orders jumped 9.1% while foreign orders fell 2.1%, indicating that the recent strength is concentrated in a few large contracts and intra‑Euro‑zone demand.
Technical analysis on the four‑hour chart shows EUR/USD consolidating around 1.1620. The MACD indicator is bullish, with its signal line above zero, while the Stochastic oscillator sits above 20 and points upward, suggesting room for a move toward 1.1655. A break below the 1.1620 support zone could open a path toward 1.1525.
In summary, the pair enters the ECB week with technical bias toward the upside, but the fundamental picture remains split between two central banks moving in the same direction. The rate hike to 2.50% is fully priced in; guidance from the ECB will determine whether the euro can advance toward 1.1655 or retreat toward 1.1525. The upcoming US inflation report next week is likely to provide the next catalyst on the dollar side.
