EURUSD Price Analysis: Upside Limited as NFPs Loom

Euro and US dollar:

• EURUSD short-term downtrend may hold.
• USD to be driven by NFPs and then US mid-term elections.

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EURUSD Rally Running into Resistance

The impressive bounce off 1.1300 has seen EURUSD push back above 1.1420 - a fresh one-week high - and back towards a confluence of important chart points between 1.1461 and 1.1557. The upside may be limited in the short-term however by the latest look at the US labor market, with 193k jobs new jobs expected to have been added last month. Today’s average hourly earnings figure may be of more interest however, especially for inflation watchers, with a rise of 3.2% m/m in October expected, compared to 2.8% last month.

The bounce off 1.1300, the August 15 low print, coincided with a bout of USD weakness, with the US Dollar basket (DXY) over 1 point lower in the last two days. Support for the greenback nears at 95.55 and 95.21. The uptrend remains in place for now but a break and close below the October low at 94.98 would threaten further upside.

The US dollar weakened overnight after US President Donald Trump indicated that trade talks between the US and China had been productive and that he had asked officials to begin drawing up a draft agreement.

Asian Stocks Rise as Trade Hopes Endure, US Payrolls Up Next

US Dollar Basket Daily Price Chart (February – November 2, 2018)

IG Client Sentiment Data shows investors are currently 62.6% net-long EURUSD – a contrarian bearish signal – but recent daily and weekly positional shifts give us a mixed EURUSD bias.

EURUSD Daily Price Chart (February – November 2, 2018)

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What is your view on EURUSD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.com or via Twitter @nickcawley1.