EUR/USD: Pennant breakdown confirmed ahead of US non-farm payrolls

The pennant breakdown seen in the EUR/USD chart indicates a resumption of the downtrend from the February highs above 1.2550.
An above-forecast US July non-farm payrolls and wage growth number would only bolster the already bearish technical setup.

Omkar Godbole FXStreet Contributor

The EUR/USD is on the defensive ahead of the US non-farm payrolls release.

The currency pair closed at 1.1584 on Thursday, confirming a downside break of the 1.5-month-long pennant pattern. So, the doors are open for a drop to 1.15 and the move will likely happen today if the US non-farm payrolls and wage growth number betters estimates.

On the other hand, a weaker-than-expected print may allow EUR/USD to re-test the resistance at 1.1627 (lower end of the pennant), although bulls are cautioned against being too ambitious as the gains could be short-lived, courtesy of CNY slide.

A sustained rally in the EUR/USD looks like if CNY stages a sharp corrective rally and the US data misses estimates by a big margin.

At press time, the currency pair is trading at 1.1590.

The data scheduled for release today at 12:30 GMT is expected to show that the US economy created 190K jobs in July compared to 213K jobs created in June.

Meanwhile, wage growth or average hourly earnings are seen rising 0.3 percent month-on-month in July, up from the 0.2 percent rise in June. And last but not the least, the jobless rate is seen falling to 3.9 percent from 4.0 percent.

EUR/USD Technical Levels

Key resistance: 1.1627 (lower end of the pennant now acting as a resistance), 1.1641 (50-hour moving average), 1.1663 (10-day moving average).

Key support: 1.1575 (July 19 low), 1.1527 (June 28 low), 1.1508 (June 21 low).

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

GBP/USD surges to multi-day peaks past 1.3250

GBP/USD leaves behind Friday’s small pullback and advances past 1.3250 level, or five-day highs, on Monday. Cable’s upside follows extra losses in the Greenback, while traders continue to assess the geopolitical front and upcoming key events.

EUR/USD picks up extra pace north of 1.1400

EUR/USD extends its recovery past 1.1400 the figure as the NA session draws to a close on Monday. Indeed, the pair advances for the third straight day amid the persistent offered bias in the US Dollar. Meanwhile, market participants keep gearing up for the ECB Forum in Sintra and the release of critical US labour market data.

Gold struggles to attract investors

Gold remains under marked selling pressure, holding on just above the key $4,000 mark per troy ounce at the beginning of the week. The precious metal reverses two daily advances in a row as renewed effervescence in the Middle East revive inflation concerns and bolster Fed rate hike expectations.

Strategy unveils plan allowing Bitcoin sales to fund stock buybacks, dividends and reserves

Strategy (MSTR) has unveiled a Digital Credit Framework to strengthen the company’s financial standing. Under the new framework, the world’s largest corporate holder of Bitcoin (BTC) will pivot from its previous accumulation strategy, opting to sell BTC in order to boost liquidity, fund dividend payments, execute stock buybacks, and strengthen cash reserves.

Just like Fed, is BoJ’s independence under threat?

When talking about central bank independence, most of the focus has been on Donald Trump’s pressure on the Federal Reserve. But a similar story, a quieter one for now, seems to be happening on the other side of the Pacific: Japan’s government may be testing the Bank of Japan’s independence.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.