EUR/USD Soars Amid U.S. Job Growth and Market Dynamics: What Lies Ahead?

EUR/USD holds above 1.04000 levels on board-based US dollar selling. It hit an intraday high of 1.04420 and currently trading around 1.04253.

Employment Insights and Economic Context

On February 5, 2025, the ADP National Employment Report indicated that the private sector of the U.S. added 183,000 jobs in January, against expectations of 148,000 and more than December's 122,000. The service sector accounted for 190,000 jobs and was dominated by gains in trade, transportation, utilities, and leisure/hospitality, whereas the goods-producing sector lost 6,000 jobs, and manufacturing alone lost 13,000. Wage growth was also solid, as annual pay grew 4.7%, while job-changers saw an even bigger increase of 6.8%. Manufacturing also showed some weakness despite good job creation. ISM Services PMI in January 2025 declined to 52.8 from December's 56.8 and shows that services sector growth slowed down more than expected. This decline also reflects a decline in new orders for business as well as for exports, except that hiring accelerated to the most significant increase of jobs in the past 30 months. But rising input prices may also raise concerns about possible inflationary forces.

Technical Analysis of EUR/USD

The pair is holding above short and long-term moving averages in the 4-hour chart. Near-term resistance is seen at 1.0470; a break above this may push the pair to targets of 1.0500/1.0535/1.0575, and  1.0600/1.0660. Major bullish momentum is likely only if prices can break above 1.0660, where levels of 1.0700, 1.0760, and 1.0800 await. On the downside, support is seen at 1.0400 any violation below will drag the pair to  1.0360/1.0300/1.0220.

Market Indicators and Trading Strategy

Commodity Channel Index (CCI)- Bullish

Average Directional Movement Index (ADX) - Bullish.  It is good to buy on dips around 1.04000  with a stop-loss at 1.0360 for a target price of 1.0535.