EUR/USD Forecast: All aboard Trump's trade turnaround train, NFP eyed

The EUR/USD extends its rally on Trump's trade turnaround.
The Non-Farm Payrolls stands out as the week draws to an end.
The technical picture has turned bullish for the pair.

Yohay Elam FXStreet

The EUR/USD is trading around 1.1430, up for a second consecutive day. November is a mirror image to October, at least in its first two days. After the pair created a double-bottom at 1.1300 on October 31st, it is surging.

Trump turnaround

The turnaround in stocks which began earlier in the week was further fueled by Trump's turnaround on trade. After the US President tweeted about a productive meeting with President Xi Jinping of China, Bloomberg reported that he asked his cabinet to draft a trade deal with the world´s second-largest economy and a rival.

Is Trump trying to push stocks higher ahead of the Mid-Term Elections? Many look at the upcoming vote on November 6th and suspect the rhetoric is hollow. Nevertheless, the leaders will meet at the end of the month in Buenos Aires, on the sidelines of the G-20 Summit, and an agreement cannot be ruled out. Calm on the trade front will remove a dark cloud over the global economy.

The resulting risk-on atmosphere sent the US Dollar and the Japanese Yen lower across the board, and the Euro is taking advantage of it.

Another source of hope came from Brexit negotiations. A report about an agreement on financial services sparked a rally in the Pound and also helped the Euro.

Other issues have been put aside. Italy and the European Commission are still at loggerheads about Italy's budget deficit. The political uncertainty in Germany is also a source of concern.

Nevertheless, the greenback has been on the back foot. Here are 5 reasons for the broad USD sell-off

Non-Farm Payrolls are here

After beating expectations on Wednesday, US data disappointed on Thursday: the ISM Manufacturing PMI fell to 57.7 points in October, below the highs seen earlier.

The figures lead up to the all-important Non-Farm Payrolls report due today. The US is expected to report a gain of around 190K jobs and an acceleration in wage growth to 3.1%.

See: Non-Fram Payrolls preview: wages' growth vs. job's creation, which one will weigh more?

EUR/USD Technical Analysis - Powerful double-bottom

EUR USD technical analysis November 2 2018

The EUR/USD is now enjoying upside Momentum on the four-hour chart. The Relative Strength Index (RSI) remains below 70, thus not pointing to overbought conditions. It is now trading above the 50 Simple Moving Average, a bullish sign.

Resistance awaits at 1.1395 which capped the pair in late October. 1.1550 was a swing high in mid-October. It is followed by the 1.1620 level, the highest point in October.

1.1430 was a swing high in late October. provided support to the pair in recent days. 1.1360 served as a temporary cushion in the last days of October. The 1.1300 level proved to be quite powerful. The textbook double-bottom is now a more robust support line.

More: EUR/USD eyes 1.1527 after surging from the double-bottom – Confluence Detector

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

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