The dollar index (#DX) shows a steady uptrend. Over the past month, the US dollar strengthened against the basket of world currencies by almost 2%. Currently, the indicator is testing annual highs. The demand for the US currency is still high amid prospects for further tightening of the monetary policy by the Fed, as well as optimistic economic reports. According to the FOMC minutes, most Fed politicians support a further increase in interest rates. Currently, more than 70% of financial market participants expect the Central Bank to increase the range of key interest rates to 2.25%-2.50% at a meeting in December.
The key event this week will be the publication of the report on the US labor market for October on Friday, November 2 (14:30 GMT+2:00). These statistics can have a significant impact on the dynamics and further alignment of forces on majors. Recent reports from the United States were ambiguous. Donald Trump's criticism of Fed policy, as well as the escalation of the trade conflict between the United States and China, put additional pressure. Washington intends to introduce duties for all remaining imports from China by the beginning of December unless mutually beneficial agreements are reached between the White House and the Celestial Empire.
Experts expect that in October, the number of people employed in the US non-farm sector will accelerate to 191,000. At the same time, the unemployment rate will increase by 0.1% to 3.8%. The growth of the average hourly wage will be 0.2% (m/m) in comparison with the previous value of 0.3% (m/m). We recommend you to pay attention to the difference between the actual and forecasted values of the figures.
- Support levels: 1.13000, 1.12500, 1.12000
- Resistance levels: 1.13750, 1.14300, 1.15000
The euro continues to lose ground against the US dollar. Over the past two weeks, the drop in the EUR/USD quotes exceeded 200 points. The single currency approached annual minimums (1.13000). A classic technical analysis figure of Descending Channel has been formed in the trading instrument, which acts as a continuation of the current trend. Indicators signal the power of sellers:
- the price has fixed below 50 MA and 200 MA;
- MACD histogram is located in the negative zone and continues to decline.
Nevertheless, we recommend opening positions from the key levels.
The EUR/USD currency pair is tending to decline. If the price consolidates below the round level of 1.13000, it is necessary to consider selling EUR/USD. The movement is tending to 1.12500-1.12000.
Alternative option. If statistics on the US labor market turns out to be weak, the EUR/USD currency pair may again test 1.14300-1.14650.
Confirmations and entry points to the market should be searched on lower timeframes. When following positions, we recommend using a trailing stop.
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.