**********As the trend of the US dollar continues to fluctuate, the market's focus shifts to the upcoming US non farm payroll report. The data release will be released by the US Bureau of Labor Statistics (BLS) on Friday (21:30 Beijing time), which will reveal the changes in non farm employment in January. The market generally expects non farm employment to increase by about 170000 in January, down from 256000 in December. Meanwhile, the unemployment rate is expected to remain around 4.1%.Non farm dataThe performance will directly affect the market's expectations of the Federal Reserve's (Fed) monetary policy, especially regarding the judgment of interest rate hikes and cuts.

Fundamental analysis

The changes in US economic data continue to affect the nerves of the market. The non farm payroll data for January is particularly important because it is not only a key indicator of the health of the US labor market, but also provides important clues for the future direction of the Federal Reserve's monetary policy. According to the latest forecast, non farm employment is expected to increase by 170000 in January, slowing down from 256000 in December. Although the US labor market continues to grow, a slowdown in growth rate may alleviate the pressure on the Federal Reserve to continue raising interest rates, bringing certain expectations of easing to the market.

Although the non farm payroll data for January is expected to slow down, the unemployment rate is expected to remain around 4.1%, indicating that the overall health of the labor market is still acceptable. In addition, salary growth is also one of the focuses of market attention. The average hourly wage in January is expected to increase by 3.8% year-on-year, slightly lower than the 3.9% in December. However, this growth rate is still relatively strong, indicating signs of a tight labor market.

In the latest policy statement of the Federal Reserve, although maintaining the benchmark interest rate of 4.25% -4.50%, the language is slightly hawkish, especially removing the previous statement that "inflation has made progress" and emphasizing that "price increases are still at a high level". Federal Reserve Chairman Powell also stated that the Fed hopes to see further improvement in inflation and may not be in a hurry to make policy adjustments. This stance has delayed the market's expectation of a rate cut by the Federal Reserve this year, with a current market expectation of a 46.3 basis point rate cut within the year.

technical analysis

The euro/dollar (EUR/USD) has shown significant volatility in recent trends and is facing important technical resistance and support in the short term. According to FXStreet's analysis, the euro rebounded near the three week low of 1.0210, but the upward momentum was limited by pressure at the 50 day simple moving average (SMA) 1.0412, posing significant challenges for further gains.

In addition, the relative strength index (RSI) on the 14th is currently close to the 50 level and has rebounded, indicating that the euro/dollar may experience a short-term downturn, especially after unfavorable non farm data is released. If the euro/dollar breaks through the support level of 1.0300, it may further drop to the three week low area close to 1.0200.

However, if the non farm payroll data for January significantly exceeds expectations, especially with employment and wage growth exceeding market expectations, the US dollar may experience a strong rebound, pushing the euro/dollar back to 1.0250 or even lower levels.

Future prospects

The future trend of EUR/USD will be mainly influenced by the upcoming release of US non farm payroll data. If the non farm payroll data falls short of expectations, especially with low employment growth, it may have a negative impact on the US dollar, thereby driving further appreciation of the euro/dollar. On the contrary, if the non farm payroll data significantly exceeds expectations, especially with strong wage growth, it may prompt a rebound in the US dollar, and the euro/dollar will face further downward pressure.

Overall, the recent trend of EUR/USD remains uncertain, and the market will closely monitor non farm payroll data and subsequent guidance from the Federal Reserve's policies. In the short term, technical indicators suggest that the euro/dollar may fluctuate and consolidate around 1.0300, awaiting further market guidance. If it breaks through the upward trend, around 1.0500 will be a key resistance level.