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Trade Setups in EUR/USD, USD/JPY, USD-pairs for October NFPs

Trade Setups in EUR/USD, USD/JPY, USD-pairs for October NFPs

Christopher Vecchio, CFA,

Talking Points:

- EUR/USD continuation eyes $1.0807, mid-July swing low.

- USD/JPY range breakout contingent on weekly close above ¥121.80.

- See the November forex seasonality report that forecasts US Dollar strength.

It's the second to last US labor market report before the Federal Reserve's December policy meeting, one which right now is seeing expectations ramped up for the first rate rate hike in nearly a decade. Yet some obstacles remains: will inflation pick back up towards the Fed's medium-term target of +2%?; and are recent disappointing labor market reports merely a blip on the radar or the beginning of something much worse?

We'll at least have a partial answer to the latter of the two questions, with the release of the October US Nonfarm Payrolls report today at 13:30 GMT. Current expectations are fairly strong, with the Unemployment Rate expected to fall to 5.0% from 5.1%, and the headline jobs figure to come in at +184K after September's disappointing +142K.

Ultimately, given recent commentary from Fed officials, the US Dollar may not need a blowout print here in order for rate expectations to remain firmly locked in on December for the first rate hike. A print close to the three-month run rate of +167K may be deemed sufficient enough to keep recent price action developments in several USD-pairs, especially EUR/USD and USD/JPY, going through mid-November.

See the above video for technical considerations in EUR/USD, USD/JPY, GBP/USD, AUD/USD, and the USDOLLAR Index.

Read more: GBP/USD Slides as BoE Cuts Forecasts, Keeps ZIRP Policies in Place

--- Written by Christopher Vecchio, Currency Strategist

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