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EURUSD Under Pressure as US Dollar Soars Ahead of NFPs

EURUSD Under Pressure as US Dollar Soars Ahead of NFPs

2018-09-04 08:00:00
Nick Cawley, Analyst
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EURUSD – Price, Chart and Technical Analysis

  • US Dollar Basket hits a 10-day high and nears resistance.
  • EURUSD continues to break lower.

The latest IG Client Sentiment Indicator shows retail are 43.3% net-long EURUSD, a bearish contrarian indicator.

The DailyFX Q3 forecasts and analysis of USD and EUR are just two of the major currencies available to download here.

US Dollar Continues to Rally Ahead of NFPs

The US Dollar Basket is back around 95.00 and pushing higher as the US returns to the fray after the Labour Day Holiday. The greenback has gained a safe-haven bid as US President Trump continues on his trade tariff crusade, while Emerging Markets continue to suffer, giving the USD an additional boost. And US dollar bulls may also be anticipating another strong US Labour Report of Friday as the economy continues to expand. Markets are expecting a short-200k+ NFP print, a 3.8%, fresh 18-year low unemployment rate (down from 3.9%) with average earnings at 0.2% m/m and constant at 2.7% y/y.

EURUSD Under Pressure as US Dollar Soars Ahead of NFPs

The US Dollar Basket (DXY) is now pushing back at the 95.00 level and looking to re-test the June double-high at 95.20 although this chart point’s relevance is not as strong as it was before. Above here, the 50% Fibonacci retracement level at 95.87 becomes a valid target ahead of the recent 14-month high at 96.60.

US Dollar Basket Daily Price Chart (December 2017 – September 4, 2018)

EURUSD Under Pressure as US Dollar Soars Ahead of NFPs

EURUSD is edging back off its recent multi-week high at 1.17340 and is currently trading at 1.15750, below its 50-day moving average at 1.16040. Below here, the 20-day moving average at 1.15470 comes into play befoe the 50% Fibonacci retracement level at 1.14480.

The latest CFTC Commitment of Traders report shows that US dollar speculative longs grew for the 17th week in row – with the US Dollar Index at a 52-week high – while EURUSD short positions coninue to grow.

EURUSD Daily Price Chart (October 2017 – September 4, 2018)

EURUSD Under Pressure as US Dollar Soars Ahead of NFPs

If you are new to foreign exchange, or if you would like to update your knowledge base, download our New to FX Guide and our Traits of Successful Traders to help you on your journey.

What’s your opinion on the US Dollar? Share your thoughts with us using the comments section at the end of the article or you can contact the author via email at Nicholas.cawley@ig.com or via Twitter @nickcawley1

--- Written by Nick Cawley, Analyst

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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