EUR/USD Daily Forecast – Euro Recovers for Second Straight Session

Poor Jobs Report and More Tariffs

The trend of weak economic data continued on Wednesday as the ADP reported an increase of 135,00 jobs in the US private sector from August to September. While this was only marginally below the analyst estimate, there was a notable downward revision for the prior reading from 195,000 to 157,000.

Earlier in the week, the ISM reported the manufacturing index to contract for the first time in three years. The sector appears to be weak globally as trade war concerns have weighed.

Further exacerbating the issue, the White House announced on Wednesday their intentions to expand the trade war out to Europe. Officials said they would place a 10% tariff on Airbus planes made in Europe and 25% on certain alcohol products as well as cheese.

The measures are set to take effect on October 18. Negotiations are to take place ahead of that and the European Union will attempt to strike some kind of a deal to prevent the new tariffs.

Technical Analysis

The dollar is under a bit of pressure in the early week although it has gained against the commodity currencies.

EUR/USD is seen trading near a horizontal level at 1.0966 which marks the lowest daily close in the first half of September. While the pair could pull back a bit here, I think we will see the recovery extend a bit higher.

There is some major resistance in play in around 1.0996, or essentially the 1.1000 handle. The level carry psychological implications amd carries confluence with the upper bound of a trend channel that has contained price action since late June.

While the pair holds above the important 1.0930 level, I expect it will attempt one more leg higher to test this important resistance area.

Bottom Line

• EUR/USD is recovering higher, boosted by weak US data
• A major resistance confluence comes into play at 1.0996.