Key Highlights
- The Euro started an upside correction from the 1.0879 low against the US Dollar.
- EUR/USD managed to surpass a bearish trend line at 1.0965 on the 4-hours chart.
- The US nonfarm payrolls increased 136K in Sep 2019, less than the market forecast of 145K.
- The US unemployment rate declined to 3.5%, lowest since December 1969.
EUR/USD Technical Analysis
The Euro started a decent recovery after trading as low as 1.0879 against the US Dollar. The EUR/USD pair climbed above 1.0900 and 1.0950, but it might struggle to continue higher in the near term.
Looking at the 4-hours chart, the pair traded above the 38.2% Fib retracement level of the major downward move from the 1.1109 high to 1.0879 low. Moreover, the pair managed to surpass a bearish trend line at 1.0965.
However, the pair faced a strong resistance near the 1.1000 level and the 100 simple moving average (red, 4-hours). Besides, the 50% Fib retracement level of the major downward move from the 1.1109 high to 1.0879 low also acted as a resistance.
More importantly, the 1.1020 area is also a significant resistance since it coincides with the 200 simple moving average (green, 4-hours). Therefore, the pair must settle above 1.1000 and 1.1020 to continue higher.
Conversely, if the pair struggle to climb above 1.1020, it could resume its decline. An immediate support is near the 1.0950 level, below which the pair may perhaps retest the 1.0900 support area.
Fundamentally, the US nonfarm payrolls report for Sep 2019 was released by the US Bureau of Labor Statistics. The market was looking for the NFP to increase 145K, more than the last 130K.
The actual result was on the lower side, as the total nonfarm payroll employment rose by 136K. However, the last reading was revised up from 130K to 168K. More importantly, the unemployment rate declined from 3.7% to 3.5%.
The report added:
In September, the unemployment rate declined by 0.2 percentage point to 3.5 percent. The last time the rate was this low was in December 1969, when it also was 3.5 percent. Over the month, the number of unemployed persons decreased by 275,000 to 5.8 million.
Overall, EUR/USD might struggle to clear the 1.1020 resistance area. Similarly, GBP/USD is facing a lot of hurdles on the upside near 1.2400 and 1.2420.
Upcoming Economic Releases
- German Factory Orders for August 2019 (MoM) – Forecast -1.5%, versus -2.7% previous.
- Euro Zone Sentix Investor Confidence for Oct 2019 – Forecast -13.0, versus -11.1 previous.
