EUR/USD Forecast: Vulnerable ahead of the NFP after losing uptrend support

The EUR/USD is trading lower amid US Dollar strength.
The Non-Farm Payrolls report is left, right, and center.
The pair looks vulnerable after losing uptrend support.

Yohay Elam FXStreet

The EUR/USD trades below 1.1600, stable after another day of losses on Thursday. The US Dollar is driving higher across the board once again. Echoes from the Fed's upbeat statement on Wednesday and another exchange of hostility between the US and China push the greenback higher.

US Commerce Secretary Wilbur Ross stressed that the US will keep the pressure on China until there is a leveled playing field on trade. China said it will never surrender and also devalued the yuan once again.

Additional headlines on trade are set to move all markets and the pair as well. Any additional hostilities may boost the greenback and any reports about negotiations can send it lower.

The focus now shifts to the all-important jobs report from the US. Non-Farm Payrolls are expected to rise by 190,000 in July after 213,000 in June. More importantly, wages carry expectations for a monthly increase of 0.3% after 0.2% beforehand and 2.7% year over year, repeating the number from June. Any deviation in wages will significantly impact the pair.

See:

In the euro-zone, Spain's services PMI disappointed with a sharp drop from 55.4 to 52.6 points, indicating a slowdown. The same figure in other countries was OK. The reaction is minimal due to the NFP.

EUR/USD Technical Analysis

After making a false break above downtrend support, the pair dropped and eventually lost uptrend support. The most recent break out of the wedge seems more decisive and it is a bearish signal. Momentum is strong to the downside but the Relative Strength Index is below 30 at the time of writing, indicating oversold conditions.

Immediate support is at 1.1575 which is the low point in July. Further down, the 2018 trough at 1.1508 could halt the pair. Below these levels, 1.1471 is a level dating back to July 2017.

On the topside, we find 1.1620 which supported the pair in late July and now switches to resistance. 1.1665 is the next level to watch after it separated ranges in late July and is also the 200 Simple Moving Average on the 4-hour chart. 1.1720 is a weak resistance line before the four-time cap at 1.1750.

More: EUR/USD has no significant support until 1.1471 on NFP day – 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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