EUR/USD analysis: USD eases on fears of contagion
EUR/USD Current price: 1.1403
- Trump economic adviser Hassett said that the trade war with China will force many US companies to join Apple in downgrading earnings.
- US employment data came in mixed ahead of the December Nonfarm Payrolls report.
The market reversed the wild crash that took place at the beginning of the day and boosted the greenback, which ends Thursday losing ground against most major rivals amid mixed employment and quite tepid business data. The EUR/USD pair hit a daily high of 1.1410 mid-US afternoon, with the final trigger being the ISM Manufacturing Index, which plunged in December to 54.1 from 59.3 in November, its lowest reading since August 2016, when it registered 50.5, according to the official release. As for employment figures, employers at US-based companies announced plans to cut 43,884 workers from their payrolls during November, according to the Challenger report, well below the previous 53,073, although in the year-to-date, the total is nearly 29% higher. The ADP survey showed that the private sector created 271K in December well above the expected 178K, while the previous reading was revised lower to 157K. Initial Jobless Claims for the week ended December 28 unexpectedly rose to 231K vs. the market's expectations of 220K.
Adding fuel to the fire, Trump economic adviser Kevin Hassett said that the ongoing trade war with China will force many US companies to join Apple in announcing lower-than-expected earnings. US indexes collapsed as an immediate reaction to the news but slowly bounced back, holding into negative ground but trimming most of their intraday losses. Attention now shifts to the US Nonfarm Payroll report. The country is expected to have created 177K new jobs in December, while the unemployment rate is expected to remain unchanged at 3.7%. Average hourly earnings are foreseen posting another month of solid growth.
The EUR/USD pair trades near its daily highs by the end of the US session, finding short-term resistance in a bearish 20 SMA in the 4 hours chart, now above the 100 and 200 SMA which remain directionless. Despite some wild spikes both side of the board, the pair remains within familiar levels and without a certain longer-term trend. In the mentioned chart, technical indicators have corrected from extreme oversold readings but lost upward strength within negative ground, limiting the upward potential. Sustained gains above the 1.1420/30 region will give bulls an encouraging hint.
Support levels: 1.1385 1.1350 1.1310
Resistance levels: 1.1425 1.1460 1.1500
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.
