EUR/USD analysis: thin market conditions may see the USD losing ground

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1520

The US and Canada will be on holidays this Monday.
EUR/USD bounced modestly from key long-term support, could extend corrective recovery.

Strengthening Treasury yields led the way higher for the USD the past week, overshadowing a mixed US employment report. The EUR/USD pair fell to 1.1463 to close at 1.1520, down for a second consecutive week. According to the official release, the US economy added 134K new jobs in September, well below the expected 185K. The unemployment rate, however, fell to 3.7% its lowest in 49 years, while August headline number was upwardly revised to 270K, from a previous estimate of 201K. Wages grew as expected by 0.3% MoM and by 2.8% YoY. The unemployment rate fueled already strong yields, with the benchmark 10-year Treasury yield hitting its highest level since 2011, to close the week at 2.33%, although gains were triggered by comments from US Federal Reserve head, who said that the central bank could keep raising rates beyond the "neutral" level.

The week will start with a holiday in the US and Canada, and a scarce EU macroeconomic calendar, as the Union is only offering the Sentix Investor Confidence Index for October, previously at 12. The greenback could acknowledge receipt of the unimpressive NFP report on thin market's conditions.

The pair is technically bearish according to the daily chart, as it extended its decline below moving averages after breaking lower at the end of the previous week, while technical indicators hold directionless near oversold readings. The 20 and 100 DMA converge in a 50 pips' range with the shortest still above the larger one, somehow indicating limited selling interest. In the shorter term, the 4 hours chart also skews the risk to the downside, as the price is now struggling with its 20 SMA while far below the larger ones, as technical indicators have stalled their recoveries below their midlines, losing upward strength. An upward corrective movement can extend up to the 1.1620 region without hurting the dominant bearish trend, while a break below 1.1460 should see it resuming.

Support levels: 1.1500 1.1465 1.1420

Resistance levels: 1.1550 1.1590 1.1625

View Live Chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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