Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0400.
- Add a stop-loss at 1.0600.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.0540 and a take-profit at 1.0625.
- Add a stop-loss at 1.0400.
The EUR/USD price bounced back in the overnight session as the US bond sell-off eased after the latest US private payrolls data. The pair rose to a high of 1.0530, a few points above this week’s low of 1.0448.
US non-farm payrolls (NFP) ahead
The EUR/USD exchange rate drifted upwards as the price of crude oil and bond yields retreated. Brent, the international benchmark, dropped by more than 4.30% to $87.05 while the West Texas Intermediate (WTI) slipped to $85.30.
It also rose slightly after the relatively weak US private payrolls data. According to ADP, the private sector added 89k jobs in September after adding 180k in the previous month. This increase was worse than the median estimate of 153k.
Additional data showed that America’s services PMI dropped from 50.5 in August to 50.1 in September, lower than the expected 50.2.
The falling crude oil prices and disappointing US private payrolls and PMIs helped push US bond yields downwards. The 10-year bond yield dropped to 4.73% while the 30-year plunged to 4.87% as the recent rally took a breather.
The next important economic data to watch will be the official non-farm payrolls (NFP) data set for Friday. Economists polled by Reuters expect the data to show that the labor market softened in September.
Precisely, they see the NFP coming at 163k, down from the previous month’s 187k. They also expect that the unemployment rate will be 3.7% while the average hourly earnings will be at 4.3%.
Meanwhile, the EUR/USD price reacted to a hawkish statement by Christine Lagarde. In a statement, she insisted that the ECB would maintain restrictive policies in the foreseeable future. Her statement came even as data showed that European’s retail sales dropped by 1.2% and 2.2% on a MoM and YoY basis.
EUR/USD technical analysis
The EUR/USD pair has been in a downward trend since July. On the 4H chart, the pair formed a descending channel and is now at its middle point. The pair remains below the 50-period exponential moving average (EMA). It also moved slightly above the crucial resistance at 1.0488, the lowest swing on September 27th.
The Stochastic Oscillator has moved above the neutral point. Therefore, the outlook for the pair is bearish, with the next target being this week’s low at 1.0435. A break below that support will see it drop to the psychological level at 1.0400.
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