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EUR/USD is testing a major support zone ahead of the U.S. NFP release!

Will we see a breakout today?

Before moving on, ICYMI, yesterday’s watchlist looked at USD/CAD’s descending channel ahead of the U.S. ADP report release. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

Japan’s real wages fall by 3.8% y/y in November, the fastest pace in over 8 years thanks to inflation

Oil extends gains after EIA report reflected last week’s sharp decline

China allows cities to set lower limit on first-home mortgage rates

Crypto exchange Huobi to lay off 20% of staff

UN food agency: World food prices hit record high in 2022 despite December fall

European shares head for best week since November, inflation data in focus

Germany’s retail sales up by 1.1% m/m in November

Halifax: UK’s house prices fell by 2.5% in the three months to December, the biggest drop since February 2009

Germany’s factory orders down by 5.3% m/m in November, the fastest decline since October 2021

Upcoming Potential Catalysts on the Forex Economic Calendar:

Eurozone’s CPI flash estimate at 10:00 am GMT
Eurozone’s retail sales at 10:00 am GMT
U.S. NFP reports at 1:30 pm GMT
U.S. unemployment rate at 1:30 pm GMT
Canada’s labor market data at 1:30 pm GMT
Canada’s IVEY PMI at 3:00 pm GMT
U.S. ISM services PMI at 3:00 pm GMT

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

What to Watch: EUR/USD

EUR/USD 4-hour Forex Chart by TradingView

In case you missed it, global growth concerns and expectations of higher interest rates in the U.S. have weighed on risk-friendly assets like EUR.

EUR/USD, which peaked at 1.0700 in December, is now down to 1.0500 psychological level.

That’s a big deal for bulls and bears who have noticed that 1.0500 is a major inflection point on the 4-hour chart!

Will EUR/USD see more losses today?

Word around is that Uncle Sam will print weaker labor market numbers for the month of December. More importantly, the numbers won’t likely change the Fed’s plans to raise its interest rates some more this year.

Meanwhile, traders are also watching the Eurozone’s inflation numbers scheduled during the London trading session.

Markets see a lower headline inflation rate (9.6% y/y from 10.1%) but also a higher core inflation figure (5.1% from 5.0% y/y).

If today’s reports point to the Fed tightening its policies faster than the ECB, then EUR/USD could extend its downswing and start a more sustained downtrend.

But if today’s market themes encourge risk-taking, then EUR/USD could find support from 1.0500 and retest previous inflection points like 1.0590 or 1.0640.