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Euro Searches for Support; USD/CAD Topside Targets Favored for NFP

Euro Searches for Support; USD/CAD Topside Targets Favored for NFP

David Song, Strategist

Talking Points:

- EUR/USD Pares Losses Following Dovish ECB as Draghi Looks to Buy More Time

- USD/CAD at Risk for Fresh Monthly Highs on Dismal Canada Employment Report.

- USDOLLAR Continues to Push Fresh Highs Ahead of NFP; RSI in Focus.

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EUR/USD

EUR/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Despite speculation for additional monetary support (corporate bond-purchases/more attractive T-LTRO), it seems as though the European Central Bank (ECB) is trying to buy more time as President Mario Draghi tries to restore confidence in the Governing Council.
  • Nevertheless, the long-term outlook for EUR/USD remains bearish amid the growing deviation in the policy outlook; next downside target comes in around 1.2310-20 (38.2% expansion).
  • There’s been increased volatility in the DailyFX Speculative Sentiment Index (SSI) ahead of the ECB meeting, but the ratio has flipped back into positive territory, with the figure currently standing at +1.17.

USD/CAD

USD/CAD Daily Chart
  • Long-term outlook for USD/CAD remains bullish as the inverse head-and-shoulders pattern from earlier this year continues to generate higher highs & lows in the exchange rate.
  • With Canada Employment expected to contract 5.0K in September, a marked slowdown in job growth may drag on interest rate expectations as the Bank of Canada (BoC) remains in no rush to further normalize monetary policy.
  • Would like to see a close above 1.1430 (161.8% expansion) to favor a further advance, with the next topside region of interest coming in around 1.1530 (38.2% retracement).

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Read More:

EUR/USD Slumps Below $1.2400 as Press Conference Affirms Dovish ECB

Price & Time: Less Headwinds in the Aussie?

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11273.29

11274.79

11205.73

0.37

107.37%

Euro Searches for Support; USD/CAD Topside Targets Favored for NFPUSDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar Index continues to press fresh highs ahead of Non-Farm Payrolls (NFP), which is expected to show another 235K gain in employment.
  • Beyond the headline reading, will also keep a close eye on Average Hourly Earnings amid the subdued outlook for inflation.
  • Coming up against channel resistance, along with the next key region of interest around 11,308 (50.0% expansion) -11,312 (78.6% retracement).

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Release

GMT

Expected

Actual

Challenger Job Cuts (YoY) (OCT)

12:30

--

11.9%

Initial Jobless Claims (NOV 1)

13:30

285K

278K

Continuing Claims (OCT 25)

13:30

2365K

2348K

Nonfarm Productivity (3Q P)

13:30

1.5%

2.0%

Unit Labor Costs (3Q P)

13:30

0.5%

0.3%

Click Here for the DailyFX Calendar

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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