Fundamental analytics

EUR / USD: Non-Farm Payrolls and Jerome Powell are in a Spotlight

EURUSD

Weak US economic statistics support the upward movement of the EUR / USD pair. After the manufacturing sector's PMI reduced to its lowest level since June 2009, a fall to three-year lows marked the PMI of the US non-manufacturing sector. This causes serious concern for investors regarding the spreading of negative trends in all areas of the US economy. Against this background, investors are revising their expectations regarding the Fed’s further actions. If last week, according to CME Group, the probability of two rate cuts before the end of the year was estimated at 19%, now it is 53%. As early as Wednesday, this indicator was at the level of 39%.

The prospect of a reduction in the differential rates in the EU and the US is a strong support factor for the EUR / USD pair, despite the risks associated with Brexit and weak macro statistics from the EU.

Today, the US dollar and US news will continue to have a dominant influence on the dynamics of the entire financial market. Following weak PMI data, investors are eagerly awaiting the publication of a labor market report. There is a high probability that the main indicators will be below market expectations.

No less powerful influence on the trading can have the scheduled performances of Fed representatives Brynard, Bostik, George, Clarida, Quarls and Jerome Powell.

On the graph, we note the continuing local priority of the upward trend. After a small correction to the area of ​​1.0945, we can expect the development of a new bullish wave in the direction of the levels of 1.1025 and 1.1085.

Resistance levels: 1.0990, 1.1025, 1.1085.

Support levels: 1.0945, 1.0915, 1.0890.

The main scenario is a correction to 1.0945 and the resumption of upward movement.

An alternative scenario is an increase to 1.1025 and 1.1085 from current levels.

The fundamental background remains positive. Bullish signals prevail locally on the chart. We recommend considering longs from the levels of 1.0945 and 1.0890.

 

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