EUR/USD Daily Fundamental Forecast – October 10, 2016

EURUSD continues to range within specified limits and extremes as it has been doing so for many weeks now. Last Friday saw the release of NFP from the US which showed that the US added fewer jobs than expected. This pushed back the expectations of a rate hike and it looks like the US Fed will raise rates only early next year, something that we have been saying for long. This proved a disappointment to the markets and led to some USD weakness which was used by the EURUSD bulls to push the pair towards the small resistance at 1.1200. It sits at 1.1190 as of this writing.

The pair had moved towards the support at 1.1100 during the early part of the day due to general USD strength but the slightly worse NFP report was enough to push the EURUSD upwards towards 1.1200. A look at the attached chart will show you that the price has got boxed in by the resistance created by the daily 200 SMA which is used by many fund managers as a guidance for their trading. For today, we expect the range to continue to hold and if and when 1.1200 gives way, we can expect the price to move to the next resistance of 1.1250. The prices have been contained between 1.1100 and 1.1250 for the past 2-3 weeks and we believe that nothing has changed for it to move beyond these range extremes.

For today, it is a holiday in Japan, Canada and the US and hence we expect the volatility and the liquidity to be less than the usual. On the other hand, we have the US Presidential debate going on as we write this and this is likely to affect the volatility to an extent, but not enough to cause the pair to move out of its specified ranges. As long as you trade the range extremes on this pair, these times seem to be the best to make the most out of this pair.

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