EURUSD, DXY Analysis: Post Non-Farm Payroll Outlook
Week’s Recap:
- US ISM Manufacturing PMI: Negative
- JOLTS Job Openings: Negative
- ADP Non-Farm Employment Change: Negative
- ISM Services PMI: Positive
- Non-Farm Payrolls: Pending
- FOMC Statements by Members Waller and Williams
Key Events for the Week Ahead:
- US Consumer Price Inflation (Wednesday)
- ECB Monetary Policy Decision (Thursday)
Following the negative results from the leading economic indicator, the US ISM Manufacturing PMI, along with negative employment indicators, the market sentiment is leaning towards the bear side ahead of the NFP reports, and ahead of technical key breakout levels.
The EURUSD and US Dollar Index facing critical levels between a trend reversal and confirmation, beyond the borders of December and July 2023 extremities, as policies are awaited to confirm the trends. Today’s non-farm payroll result, followed by the remarks from FOMC members Williams and Waller, are set to shape the magnitude expectation of the upcoming Fed rate cut, possibly giving more weight to the employment stats over next week’s consumer price inflation data.
From a monetary policy perspective, the EURUSD is expected to face a bearish wave with the high probability of a rate cut by the ECB next Thursday, which is expected to take place after the non-farm and US CPI indicator market impacts.
Technical Outlook:
DXY Analysis: 3-Day Time Frame – Log Scale
Source: Tradingview
The DXY is trading near its December 2023 lows and appears poised to drop toward the July 2023 lows around the 99.60 level, particularly if NFP data disappoints. A continued decline could reinforce the downtrend that has been in place since the 2022 highs.
On the upside, the lower boundary of the trendline connecting consecutive higher lows between 2023 and 2024 is likely to offer resistance near the 102 level. A stronger-than-expected result could push the DXY higher, with potential resistance around the 104 level.
EURUSD Analysis: 3-Day Time Frame – Log Scale
Source: Tradingview
The EURUSD is currently rebounding from the 1.1030 support zone, supported by a relative strength indicator bounce from its moving average on the 3-day time frame. The overall trend appears set for a bullish breakout, with a close above the 1.120 and 1.130 resistance levels needed to confirm the uptrend that began from the 2022 lows.
On the downside, unexpected results from the US labor market or inflation data could dampen expectations for upcoming Fed rate cut magnitude. Combined with a potential ECB rate cut, the EURUSD could see declines toward 1.0980, 1.0920, and 1.0890, potentially holding just below the 1.1020 level and aligning with the trendline connecting consecutive lower highs between 2023 and 2024.
--- Written by Razan Hilal, CMT – on X: @Rh_waves
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Contracts for Difference (CFDs) are not available to US residents.
FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of Stonex Group Inc.
Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.
© FOREX.COM 2024