Rate of EUR/USD Subject on Solid US NFP Statistics

VOT Research Desk

Nov 4

Analytics and Recommendations

The US Non-Farm Payrolls (NFP) report may contribute to the recent weakness in the exchange rate as the update is expected to show a further progress in the labor market. The EUR/USD fell to a new weekly low (0.9730) as it continues to be under pressure following the Federal Reserve interest rate course of action.

Vulnerable TO Positive US NFP REPORT IS EUR/USD RATE

After failing to surpass the September top (1.0198), EUR/USD is trading back just below 50-Day SMA (0.9873). The exchange rate may find it difficult to maintain the increase from the yearly low (0.9536) as it seems to be pursuing the moving average’s downward trend.

The US economy is expected to add 200K jobs in October, and indications of a robust labor market may give the Federal Open Market Committee (FOMC) more leeway to pursue a highly restrictive policy as Chairman Jerome Powell stresses that “it is very improper” to cease the hiking-cycle. Despite the fact that time, the NFP report may weigh on the EUR/USD.

Till then and, the EUR/USD may face downside risks as the European Central Bank (ECB) appears uninterested in pursuing a constrictive policy, and the retail sentiment tilt appears set to linger as traders have been net-long the pair for the majority of the year.

As of now, 66.90% of traders are net-long EUR/USD, with the long-to-short ratio standing at 2.02 to 1.

The number of investors net-long is 14.20% higher than just the other day and 29.94% elevated than last week, whereas the number of traders net-short is 18.53% relatively low than late last night and 26.66% smaller than last week. The increase in net-long interest has bolstered crowding behavior patterns. Last week, 53.29% of traders were net-long EUR/USD, while the decline in net-short position comes as the exchange rate trades to a new weekly drop (0.9730).

The exchange rate may struggle to hold the gain from the yearly low (0.9536) as it appears to be tracking the negative gradient in the 50-Day SMA, which would keep the EUR/USD under pressure. Additionally, another increase in US employment may keep the currency pair under pressure as it fuels speculation for another 75bp Fed rate hike (0.9873).

The exchange rate may follow the negative slope of the moving average as a result of the failed attempt to test the September high (1.0198), as EUR/USD continues to trade below the 50-Day SMA (0.9873).

A break or close below the 0.9530 (61.8% expansion) area will open up the Fibonacci overlap around 0.9380 (261.8 percent expansion) to 0.9430 (261.8 percent expansion) area if there is insufficient momentum to hold above the 0.9910 (78.6% retracement) to 0.9950 (50 percent expansion) region.

However, a move above the 0.9910 (78.6% retracement) to 0.9950 (50 percent expansion) region will bring 1.0070 (161.8% expansion) back on the radar if EUR/USD defends the October low (0.9632).

SMA – Daily