Key Highlights
- The Euro started an upside correction from the 1.0925 low against the US Dollar.
- EUR/USD is facing resistance near 1.1080 and a bearish trend line on the 4-hours chart.
- The US Nonfarm Payrolls increased 130K in August 2019, less than the 158K market forecast.
- The UK Industrial production could decline 0.1% in July 2019 (MoM), similar to the last month.
EUR/USD Technical Analysis
After trading to a new multi-month low at 1.0925, the Euro started a decent upside correction against the US Dollar. The EUR/USD pair climbed above 1.1000, but it is facing a lot of hurdles on the upside.
Looking at the 4-hours chart, the pair traded above the 1.1020 resistance level plus the 50% Fib retracement level of the downward move from the 1.1163 high to 1.0925 low.
However, the upward move was capped by the 1.1080 and 1.1090 resistance levels. Moreover, the pair is also facing hurdles near the 100 simple moving average (red, 4-hours) and the 61.8% Fib retracement level of the downward move from the 1.1163 high to 1.0925 low.
There is also a crucial bearish trend line forming with resistance near 1.1100 on the same chart. Therefore, the pair needs to climb above the 1.1080 and 1.1100 resistance levels to continue higher.
Conversely, if EUR/USD fails to break the 1.1080 and 1.1100 resistance levels, it could start a fresh decline. An immediate support is near the 1.0980 level, below which the pair could test the 1.0950 support area.
Fundamentally, the US nonfarm payrolls report for August 2019 was released by the US Department of Labor this past Friday. The market was looking for an increase of 158K, down from the last reading of 164K.
The actual result was disappointing as the US NFP rose by 130K in August 2019. Moreover, the last reading was revised down from 164K to 159K. Besides, the unemployment rate was unchanged at 3.7%.
The report added:
The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.2 million in August and accounted for 20.6 percent of the unemployed.
Overall, EUR/USD could struggle to continue higher and it might correct lower. Similarly, there could be a downside correction in GBP/USD before a fresh increase.
Upcoming Economic Releases
- Germany’s Trade Balance for July 2019 – Forecast €17.5B, versus €18.1B previous.
- UK Industrial Production for July 2019 (MoM) – Forecast -0.1%, versus -0.1% previous.
- UK Manufacturing Production for July 2019 (MoM) – Forecast -0.1%, versus -0.2% previous.
