EUR/USD: Market turns indecisive ahead of US Nonfarm Payrolls

The EUR/USD market seems to have turned indecisive ahead of the all-important US Nonfarm Payrolls report, which is expected to show the job growth slowed in October.

Doji candle

The common currency on Thursday witnessed two-way business, but ended on a flat note, forming a Doji candle on the daily chart. That candlestick pattern represents indecision in the market place.

Also, the pair has formed an inverse head-and-shoulders pattern on the daily chart with the neckline resistance at 1.1184.

Focus on Payrolls

The data due at 12:30 GMT is expected to show the economy added 84,000 jobs in October, having added 136,000 jobs in September. The unemployment rate is expected to rise by 0.1% to 3.6%.

Average hourly earnings are forecasted to climb 0.3% on the month and 3.0% on the year after no monthly gain in September and a 2.9% annual increase. The labor force participation rate and the average weekly hours are expected to remain at 63.2% and 34.4%, respectively.

Note that, October payrolls are expected to fall on General Motors strike. The decline in the jobs, therefore, will likely be viewed as a temporary development and may not hurt the US Dollar.

The greenback, however, will likely face strong selling pressure, helping EUR/USD scale resistance at 1.1184 in a convincing manner if the wage growth figure prints well below estimates. A big drop in earnings will likely put pressure on the Fed to go for another rate cut in December or January.

A close above 1.1184 would confirm an inverse head-and-shoulders breakdown and open the doors for 1.1489 (target as per the measured move method).

EUR/USD could drop below key support at 1.1131 if the US wage growth numbers blow past expectations. At press time, the pair is trading at 1.1166, representing a 0.11% gain on the day. 

Technical levels