CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open an account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open an account
✖

EUR/USD forecast bearish despite NFP disappointment – Forex Friday

Article By: ,  Market Analyst
November 1, 2024 4:16 PM

Following this week’s stronger Eurozone GDP and CPI, plus weakness in US GDP and JOLTS jobs opening, the EUR/USD had managed to rebound to 1.0880. Then it found additional support once the US nonfarm payrolls report (NFP) came out, showing a much weaker headline print of 12K instead of 100K expected. This sparked a bit of an extended bounce in the EUR/USD as US dollar fell across the board. However, as I have mentioned previously this week, the dollar weakness was likely to be short-lived - and so it proved, as the EUR/USD came off its earlier highs, while the USD/JPY hit a new high on the day as bond yields rebounded. Gold, too, turned lower. Today’s data release was never going to change the Fed’s decision to cut rates next week by 25 basis points, which is now a forgone conclusion. More specifically, market participants are closely watching the potential impact of a Trump victory on European and Chinese assets, given the possibility of renewed tariffs. This is the primary factor affecting the EUR/USD forecast, likely limiting gains to around 1.0900 and exposing further downside in the near-term outlook.

 

 

NFP weaker but does it matter?

 

October payrolls came in weak at 12K, far below the expected 100K, but wage growth was a bit stronger than anticipated at 0.4% versus the expected 0.3%. The unemployment rate held steady at 4.1%, as forecasted. What really catches my eye, though, is the significant two-month revision, down by 112K. August was initially reported at 142K but has been revised down to 78K—not due to a hurricane or a strike as would have been the case behind this month’s much weaker headline print.

 

Private payrolls also disappointed, showing a decline of 28K against an expected gain of 70K. Without the boost from government jobs, October would have marked the first month of negative payrolls since December 2020. And as the BLS notes, it’s "not possible to quantify the effect of storms on payrolls."

 

Looking ahead, I doubt the dollar is in for a major correction with the US election so close. Plus, there’s a chance the markets—and the Fed—might downplay softer payroll numbers, acknowledging that recent severe weather may have temporarily impacted jobs.

 

As a result, I doubt the disappointing data has materially changed the EUR/USD forecast today.

 

US election uncertainty keeping EUR/USD forecast downbeat

 

The euro is feeling the pressure as odds rise for a potential Trump win in the upcoming US presidential election, which could steer the EUR/USD forecast into bearish territory. Trump's policies, particularly tax cuts and tariffs, tend to support the dollar by encouraging economic growth and stoking inflationary pressures. This inflation outlook can boost the dollar's appeal, likely pushing the EUR/USD lower as markets anticipate a less dovish US monetary policy outlook, despite today’s weaker US jobs data. On top of that, any trade tariffs affecting the Eurozone could further weaken the euro, adding to bearish sentiment around EUR/USD.

 

Technical EUR/USD forecast: Key levels to watch

 

Source: TradingView.com

 

This week the pressure eased but the technical EUR/USD forecast still remains moderately bearish while the pair trends below key resistance around the 1.09 handle on a daily closing basis. At the time of writing, the EUR/USD was looking to go back below the 200-day moving average after testing resistance in the 1.0880 – 1.0910 area (shaded in yellow on chart)

 

If the downward momentum picks up again, the initial support level to keep an eye on is Monday’s high at 1.0826. The next potential downside target lies around 1.0775-1.0780, where a one-year-old bullish trend line comes into play. A break below this zone could see the pair moving towards 1.0700 or even lower, especially if Trump secures a win in the US presidential race next week.

 

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

 

 

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

The statistical data and the awards received refer to the Global FOREX.com brand.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets

We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

© FOREX.COM 2024