EUR/USD Forecast: Slow Wage Growth in the United States Aids Buyers
An Overview
- According to US employment data, wage growth halted in December.
- In December, the US economy added employment at a steady rate.
- The European Central Bank's main interest rates may soon hit their high.
The EUR/USD outlook for today is optimistic, as the pair extends Friday's gains. The Euro rose on Friday after significant US employment data indicated that pay growth slowed in December, increasing market bets that inflation is slowing. The Fed does not need to be as active as some had predicted.
The labor market remained tight, and the US economy added jobs steadily in December, returning the unemployment rate to a pre-pandemic low of 3.5%. Meanwhile, average hourly salaries climbed by 4.6% year on year in December, down from 4.8% in November.
According to Mario Centeno, a member of the ECB Governing Council, the European Central Bank's benchmark interest rates should soon hit their top despite efforts to control inflation. This assumes no additional external shocks occur.
He said at a conference that interest rates will go up until the European Central Bank (ECB) felt inflation could be decreased to its medium-term objective of 2% "as rapidly as practicable.
Annual consumer price rise in the eurozone slowed to 9.2% in December from 10.1% in November, according to Eurostat numbers released on Friday, falling short of the 9.7% expected in a Reuters poll.
Centeno applauded the four-month low rating, pointing to a significant slowdown in Germany. The ECB expected that average inflation would progressively fall, but that it would not reach its objective for another three years.
EUR/USD Significant Events Today
There will be no major announcements from the eurozone or the United States. As a result, investors will continue to absorb Friday's news.
The EUR/USD is in a sharp bullish advance on the 4-hour chart, having broken over the 1.0550 and 1.0625 resistance levels. The 30-SMA has also been broken, and the RSI has risen over 50. This indicates a shift in attitude from negative to positive.
If bulls maintain their current pace, the price will most certainly reach the next resistance level at 1.0701. If the price remains above the 30-SMA, the bullish trend will continue.