In the previous EUR/USD forecast, we mentioned of the possibility of a determined resistance ahead. The sentiment and technical region of 1.19 and the upper bollinger band were located in the vicinity of any further bullish momentum. The US employment crisis did not result in an adverse implosion and the upcoming US Non Farm Payroll would provide more insight.
Looking at the EUR/USD weekly chart above, we observe an attempt to breach the strong sentiment and technical region of 1.2. As mentioned in the previous forecast, the bullish momentum encountered multiple resistances.
The currency pair had since eased back below 1.19. The notable snap back suggests a strong push factor along 1.2. For an attempt to breach 1.2 decisively, significant bullish pressure is likely required. This strong sentiment and technical region will likely yield much speculative downside interest.
The bollinger bands remain highly stretched and thus should exert increasing technical pressure to pull back towards equilibrium. This may result in the continuation of consolidation or even a retracement of the bullish gains.
The US Non Farm Payroll indicated a creation of 1371k jobs versus the estimated 1375k. Considering both figures are similar, market sentiment is likely unaffected by this. Having said so, the US Unemployment Rate turned out to be much better than expected, reporting 8.4% instead of 9.8%. With the US employment climate improving for the fourth month, this likely resulted in positive sentiment towards the US economy. This can be seen in our latest US Non-Farm Payroll analysis for premium members. The fall back to below 10% unemployment rate since the COVID 19 crisis started likely added to the sense of relief.
Employment is a fundamental component of the economy as it leads to consumer spending and hence retail sales. A low unemployment rate is an indicator of a healthy functioning economy while a high unemployment rate suggests a challenging economic climate. It is vital to continue tracking the US employment situation in the coming months.
The correlation between the EUR/USD and Gold continues to provide insight into the market sentiment. With gold continuing to fall ever since it’s trip above $2000, the question remains if this is merely profit taking or an ease of risk apprehension. If indeed risk aversion is retreating, we may see some unwinding of the recent market price actions. Premium members have access to up to date reports and therefore do remember to log in to view the latest report. If you are not a member, consider joining at just less than $0.20 a day!
As the US elections draw closer, we may experience shifting expectations for the EUR/USD. Investors are sensitive to political developments as there may be a significant impact on the country’s economy and currency.
The Bottom Line
It is imperative that we continue to monitor the global and region developments of the various ongoing challenges. The COVID-19 crisis continues and the stand off between the US and China continues to remain a possible source of volatility, especially when a number of the major points are economic in nature. These developments have the potential to send the EUR/USD either way.
It is important to follow an economic calendar as your forex trading plans may be impacted due to shifting sentiments. Members do log in to your dashboards for the economic calendar. You should also review the latest Major Currency Pairs, USD Index, Gold, Brent Oil analysis to complement your forex trading plan.
Traders should always practice proper money management and seek to understand the underlying tones for the market. May the pips be with you!
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