EUR/USD Daily Forecast – Euro Holds Weekly Gain Ahead of US Jobs Report

EUR/USD continues to struggle with the 1.1100 handle but is holding near highs for the week ahead of Non-Farm payrolls data.
Jignesh Davda

Markets Focused on Payrolls and Risk Events Next Week

Earlier reports this week suggest the US jobs report might come in softer while the end of a strike at automotive giant GM should keep employment gains underpinned. Either way, the markets still have a lot to consider as they weigh the impacts of today’s job data and next week’s risk events.

The ISM report earlier this week hints of a weaker job market as the employment portion of the report contracted for a fourth straight month. The employment report from the ADP, released on Wednesday, was also weak. The data showed 67,000 thousand additional jobs last month, falling short of the expected 137,000.

On the other hand, about 46,000 workers at GM returned to work in November, after a 40-day strike which weighed on the October jobs report.

Today’s jobs report will shed light on whether the Federal Reserve made the right decision at their last meeting to stand pat, after cutting rates three times this year.

But regardless of the outcome in jobs data, the markets will be alert to two major risk events next week. The UK election takes place which will ultimately guide how Brexit plays out from here. Also, the planned December 15 deadline for new tariffs on Chinese imports is quickly approaching. There will be some expectations for a phase one deal to be announced ahead of it.

Technical Analysis

While EUR/USD prices have struggled at the 1.1100 level over the last two days, the pair has cleared above the mid-November highs at this stage.

EURUSD 4-Hour Chart

A major level of support for the pair in the session ahead falls at 1.1072. On a 4-hour chart, the 200 moving average falls near this horizontal level to create a confluence. Further, the 100-day moving average comes in just below the level to create further support.

To the upside, resistance for EUR/USD is seen at 1.1129. This is a level that held the pair higher between April and early June, on a daily close basis. Beyond that, the 200 DMA comes into play, currently at 1.1157.

Bottom Line

  • The US jobs report could trigger some volatility if the data is a significant deviation away from the analyst estimate
  • Volatility may remain unusually elevated after the report as investors might look to adjust positions ahead of next week’s two major risk events.
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