|

EUR/USD Forecast: Ready to for a new really? Another poor US figure could spark the next surge

  • EUR/USD is trading close to two-year highs as weak US data weighs on the dollar.
  • Jobless claims, fiscal stimulus updates, and Sino-American tensions are in play.
  • Thursday's four-hour chart is showing bulls are in control. 

Another day, another dose of dollar weakness? Wednesday's dural disappointments have created a double-top and another miss could send EUR/USD beyond the fresh high of 1.1916, a minor breach of the previous 1.1909 peak.

ADP reported an increase of only 167,000 private-sector jobs in July, far below 1.5 million expected. While America's largest payroll provider has found it hard to project the official Non-Farm Payrolls figure, it has been pointing to the direction of travel. The employment component of the ISM Non-Manufacturing Purchasing Managers' Index also pointed to weakness in hiring. That hurt the dollar, despite an upbeat headline number. 

See:US Data Analysis: Big jobs number? Negative NFP looks more likely, trends could extend in gold, dollar

The highlight of Thursday's economic calendar is weekly jobless claims. While the figures are for the weeks after the one in which the Non-Farm Payrolls surveys are conducted, investors will want to see if the unsettling uptrend continues. High-frequency figures have been receiving more attention of late and another increase could send the greenback down.

See US Initial Jobless Claims: Can claims and payrolls rise at the same time?

Tension is already rising toward Friday's Non-Farm Payrolls with analysts set to provide updates to their estimates. President Donald Trump touted a "big number" coming, yet he may have not received the data just yet. Presidents often have early access to the NFP statistics late on Thursday. Expectations will likely suffer a downgrade, thus weighing on the dollar. 

Looking ahead: US Non-Farm Payrolls Preview: A dual-track labor market or imperfections in the data?

Trump said he would use an executive order to extend federal unemployment claims if Democrats and Republicans fail to reach an agreement on a new fiscal package. Senators are negotiating but it seems that the power lies with the president and also with Nancy Pelosi, Speaker of the House.

Markets are pricing in a multi-trillion boost from the government despite politicians blaming each other for stalled talks. Several programs expired on Friday and those out of work may already be feeling the pinch. Developments on that front are set to move the dollar. 

Stocks remain upbeat amid high hopes for a coronavirus vaccine. Anthony Fauci, America's top immunologist, said that tens of millions of doses could become available already this year to Americans. Another encouraging development is that the coronavirus case-curve is falling in the US.

COVID-19 infections are on the rise in the old continent, especially in Spain, France, and Belgium. Markets are shrugging it off, and continue seeing these flareups as local. If worries increase, the euro has room to fall. However, so far things seem under control. 

All in all, the wind continues blowing in favor of EUR/USD bulls, at least for now. 

EUR/USD Technical Analysis

EUR/USD failure to hold onto the break above 1.1909 does not take away from its bullish bias. Momentum on the four-hour chart remains to the upside and the world's most popular currency pair is trading above the 50, 100, and 200 Simple Moving Averages. Moreover, the Relative Strength Index is below 70, thus outside overbought conditions. 

July's high of 1.1909 is still in play and the it is followed by the round 1.20 level. Higher above, 1.2040 and 1.2110 – last seen in 2018 – are the next tentative targets.

Support awaits at the daily low of 1.1855, followed by 1.1780, a temporary peak on the way up. Next, 1.1735 and the robust 1.17 line await EUR/USD. 

Author

Yohay Elam

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.

More from Yohay Elam
Share:

Editor's Picks

AUD/USD sits at three-week highs above 0.7000 on hawkish RBA-speak

AUD/USD holds a positive bias for the fourth straight day, trading above 0.7000 in the Asian session on Wednesday and at three-week highs. RBA Deputy Governor Andrew Hauser's hawkish remarks and inflation concerns underpin the pair. However, the upside appears capped as the US Dollar attracts some buyers amid looming US-Iran uncertainty.

USD/JPY remains confined in a familiar range below 158.50

USD/JPY sees some dip-buying in the Asian session on Wednesday, though it remains confined within a multi-week range near 158.50 as the uncertainty over the timing of the next BoJ rate hike keeps Japanese Yen bulls on the defensive. Meanwhile, hawkish Fed expectations, bolstered by inflation risks stemming from volatile oil prices, underpin the US Dollar. However, looming intervention fears could limit JPY losses and cap the currency pair.

Gold advances modestly; targets $4,150

Gold prices manage to reverse three consecutive daily declines, trading just below the $4,150 mark per troy ounce on Wednesday. The precious metal’s recovery comes amid a slight drop in the US Dollar, mixed US Treasury yields across the board and a widespread cautious tone from the US-Iran front.

Bitcoin eyes a break above $85,000 as institutional demand returns

Bitcoin edges higher above $83,000, extending its rebound from the 50-day EMA near $80,786. US-listed BTC spot ETFs recorded over $23 million in net inflows on Tuesday, following Monday's $526 million, signaling a return of institutional demand.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.

The US Dollar fell. Gold didn't rally. That tells you everything
Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.