Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1400.
Add a stop-loss at 1.1110.
Timeline: 1-2 days.
Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1110.
Add a stop-loss at 1.1400.
The EUR/USD pair held steady inside a narrow range on Thursday as market participants waited for the upcoming US nonfarm payrolls (NFP) data and reacted to the US midterm elections. It was trading at 1.1234, a few points below the important resistance level of 1.1270.
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US Dollar Softens Ahead of NFP Data
The EUR/USD pair has remained inside a narrow range and ignored some major events in the market. For example, the pair wavered after the European Central Bank (ECB) and the Federal Reserve delivered their interest rate decisions.
The pair also wavered after the Democratic party won the Senate and the House of Representatives, a move that will put pressure on President Donald Trump.
In a statement on Wednesday, ADP said that the private sector added 86k jobs last month, higher than the expected 67k. The increase was in line with the 86k that were added in September.
The Bureau of Labor Statistics (BLS) will now publish its official nonfarm payrolls data, which will provide more hints on the state of the economy. Economists expect the data to show that the economy created 63k jobs last month. Historically, the official jobs report tends to differ from the ADP one.
A strong jobs report will help investors to predict what to expect from the Federal Reserve in the December meeting. Such a figure will increase the possibility of the Fed hiking interest rates in that meeting.
The EUR/USD pair is also reacting to the latest Eurozone inflation report, which showed that prices rose to a three-year high of 4%. This surge happened because of the rising oil and gas prices. As a result, there are signs that the European Central Bank will hike interest rates in the December meeting.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair formed a double-bottom pattern at 1.1110 and a neckline at 1.1270. A double-bottom is one of the most common bullish reversal sign in technical analysis.
The Relative Strength Index (RSI) has jumped and is about to flip the neutral level of 50. A rising RSI is a sign that the pair is gaining momentum. The two lines of the MACD indicator have continued rising.
Therefore, the pair will likely continue rising as bulls target the next important resistance level of 1.1400. This view will be confirmed if it moves above the key resistance level of 1.1270.
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