Market Analytics and Considerations
Key Notes
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 improved performance in the job 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 decision.
The US economy is expected to add 200K jobs in October, and signs of a tenacious employment market may give the Federal Open Market Committee (FOMC) more leeway to pursue a highly restrictive policy as Chairman Jerome Powell emphasizes that “it is very early” to pause the trekking. Despite the fact that time, the NFP report may weigh on the EUR/USD.
Chairman Powell acknowledges that “we haven’t seen inflation starting to come down” as a consequence, and the FOMC may preserve its current strategy to achieve stable prices. However, it is unclear whether Fed officials will forecast a sharper path for US interest rates as the central bank is scheduled to release the updated Summary of Economic Projections (SEP) at the next rate course of action on December 14.
The European Central Bank (ECB) has shown little interest in adopting a restrictive policy up until this point, and the trend in retail sentiment appears certain to continue given that traders have been net-long the pair for the majority of the year.
According to data, 66.90% of traders are net long EUR/USD at the moment, with something like a long-to-short ratio of 2.02 to 1.
Traders who are net-long are up 14.20 percent from earlier and up 29.94 percent compared to the previous week, while those who are net-short are down 18.5 percent from yesterday and down 26.6 percent from the previous week. Coming in and going behavior has been encouraged by the rise in net-long interest. Last week, 53.29% of traders had net long positions in EUR/USD, while net short positions decreased as the exchange rate traded to a new weekly bottom (0.9730).
TECHNICAL ANALYTICS
The exchange rate may struggle to hold the gain from the yearly low (0.9536) as it appears to be monitoring 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 stress as it fuels supposition for another 75bp Fed rate increase (0.9873).
After failing to challenge the September high, EUR/USD trades down below the 50-Day SMA (0.9873) as the drop from the October peak (1.0094) continues. The exchange rate may follow the negative slope in the moving average (1.0198).
Inability to maintain momentum above the 0.9910 (78.6% retracement) to 0.9950 (50% expansion) region could push EUR/USD towards to the October drop (0.9632), with a drop underneath the 0.9530 (61.8% expansion) region revealing the Fibonacci crossover around 0.9380 (261.8% expansion) to 0.9430 (261.8% widening).
A move over the 0.9910 (78.6% retrace) to 0.9950 (50% extension) region would put 1.0070 (161.8% emergence) back on the radar, but only if the EUR/USD defends the October low (0.9632).
