This week a large number of important economic reports and news were published. Trades on major currency pairs are very active. The single currency remains under pressure due to concerns about the budget of Italy. The vice-premier of Italy said that the government did not intend to deviate from the stated objectives of government spendings, which implied a budget deficit of 2.4% of GDP. Investors are evaluating a new trade agreement (USMCA) between the United States, Mexico and Canada. The trade conflict between the United States and China has taken a back seat. Nevertheless, the key event will be the publication of the report on the US labor market for September on Friday, October 5 (15:30 GMT+3:00). These statistics can have a significant impact on the dynamics and further alignment of forces on major currency pairs.
The latest reports from the USA were rather optimistic. In September, the ISM non-manufacturing PMI of the United States increased from 58.5 to 61.6. According to ADP, the number of people employed in the non-farm sector of the country was 230000, which is significantly higher than the market expectations at 187,000. The consumer confidence index rose by 2.7% and reached a maximum in 18 years (138.4). The ISM manufacturing PMI of the country slowed down a little and amounted to 59.8.
At the same time, experts expect that in September, the number of people employed in the US non-farm sector will decrease to 185,000. The unemployment rate will decline from 3.9% to 3.8%. The growth of the average hourly wage will be 0.3%. We recommend you to pay attention to the difference between the actual and the forecasted values of the indicators.
- Support Levels: 1.14650, 1.14000, 1.13600
- Resistance Levels: 1.15400, 1.16250, 1.17250
The bearish sentiment is prevailing on the EUR/USD currency pair. At the moment, quotes are consolidating near the local support of 1.14650. The mark of 1.15400 is already a "mirror" resistance. Indicators point to the power of sellers:
- the price has fixed below 50 MA and 200 MA;
- the MACD histogram is located in the negative zone and continues to decline.
Nevertheless, we recommend opening positions from the key levels.
If the price fixes below the local support of 1.14650, we expect a further fall in the EUR/USD quotes. The movement is tending to 1.14000-1.13600.
Alternative option. If statistics on the US labor market turns out to be weak, the EUR/USD currency pair may again test the level of 1.15750-1.16250.
Confirmations and entry points to the market should be looked for on lower timeframes. When tracking positions, we recommend using a trailing stop.