The euro uptrend continued in the overnight session as investors and bond markets signalled that the European Central Bank (ECB) will likely hint at tapering in the upcoming meeting. The currency rose to the highest level in almost a month against the US dollar as the bond spread between the 10-year German and Italian bond widened. The benchmark German 10-year spread also jumped to the highest level in almost a month. This trend accelerated after data showed that the bloc’s consumer inflation jumped to 3.0% in August.
US stocks maintained the bullish momentum on Thursday after strong US exports and initial jobless claims numbers. The S&P 500 jumped to another record and moved above the $4,550 resistance level. This rally happened after data by the Labor Department showed that initial jobless claims declined by 14.000 last week to 340,000. That was the lowest level since the pandemic started last year. At the same time, the country’s exports rose while imports declined in July. As a result, the trade surplus declined by 4.3% from June to $70.1 billion. A drop in imports happened as demand for items like toys and sporting goods declined.
The US dollar was under pressure in the overnight session as investors refocused on the non-farm payroll numbers scheduled for later today. Analysts expect the data to show that the economy added more than 750k jobs in August after adding more than 943k in the previous month. This forecast could fall short judging by the weak data published by ADP on Wednesday. The unemployment rate is expected to drop while wages are expected to rise by 4.0%. The currency will also react to the ISM non-manufacturing PMI, which is an important gauge considering that sector is the biggest employer in the country.
EURUSD
The 30-minute chart shows that the EURUSD pair has been in a strong bullish trend in the past few days. As a result, the pair has managed to move above the short and longer-term moving averages. It also rose above the ascending trendline that connects the lowest levels since the final week of August. The pair is also above the Ichimoku cloud. Therefore, the bullish momentum will likely continue, with the next level to watch being at 1.1950.
GBPUSD
The GBPUSD pair also continued the bullish momentum as the US dollar weakness continued. The pair rose to a high of 1.3836, which was the highest level since August 16. On the hourly chart, the pair is along the upper line of the ascending channel shown in green. It is also being supported by the 25-day moving average while the Relative Strength Index (RSI) has also rallied. Therefore, the pair may keep rising as bulls target the key resistance at 1.3900. However, a short pullback cannot be ruled out.
US30
The Dow Jones index was little changed in the overnight session as US stocks maintained their bullish trend. The index is trading at $35,380. The daily chart shows that the index upward momentum has waned in the past few days. Still, it is being supported by the short and longer-term moving averages. It is also slightly above the ascending trendline. Therefore, the pair may keep rising as bulls target the key resistance at $36,000.
