EUR/USD Forecast: A “buy the fact” opportunity? Why Non-Farm may trigger a correction

EUR/US has dropped to the lowest since October.
Upbeat US data is one of the reasons for pushing the dollar higher.
A better than expected Non-Farm Payrolls may already be in the price.

Yohay Elam FXStreet

Buy the rumor, sell the fact – the old pattern is repeating itself and may provide a buying opportunity on EUR/USD.

The US dollar has reasons to rise – ADP reported a leap of 291,000 private-sector positions in January, ISM Purchasing Managers' Indexes beat expectations, and higher yields are also pushing the dollar higher. The euro has its reasons to fall – a plunge in German factory orders has shown that the manufacturing slump in the eurozone is far from over.

Nevertheless, markets tend to exaggerate and front-run events – the Non-Farm Payrolls in this case. The economic calendar is pointing to an increase of 160,000 positions in January – but realistic expectations are probably considerably higher after the ADP and ISM figures.

See

Nonfarm Payrolls Preview: Get ready for some action this time
US Non-Farm Payrolls January Preview: Indications turn positive

What are markets expecting? It is safe to say that an increase of 200,000 positions or higher is on the cards. Moreover, the US dollar is stretched into the event and even a beat with 220,000 may be insufficient to send EUR/USD higher.

Ahead of the weekend, traders may want to book profits on short positions and squeeze to the upside cannot be ruled out.

Will we see a "buy the rumor, sell the fact? The world's most popular currency pair still has time to correct before the event, but ranges tend to be tight in the hours leading to the Non-Farm Payrolls release.

EUR/USD levels to watch

To the upside: 1.0991, 1.1040, 1.1065 – all levels seen in January

To the downside: 1.0940, 1.0925, 1.0905 – lines dating back to October and September.

It is essential to note that coronavirus headlines are coming at a rapid clip and may also shift market sentiment. The current upbeat tone may change upon new cases outside China, additional plant shutdowns, or other developments.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold holds above $5,000 as bears seem hesitant amid Fed rate cut bets

Gold edges lower at the start of a new week, though it defends the $5,000 psychological mark through the Asian session. The underlying bullish sentiment is seen acting as a headwind for the bullion. However, bets for more rate cuts by the Fed, bolstered by Friday's softer US CPI, keep the US Dollar bulls on the defensive and continue to support the non-yielding yellow metal as the focus now shifts to FOMC Minutes on Wednesday.

Week ahead: Data blitz, Fed Minutes and RBNZ decision in the spotlight

The US jobs report for January, which was delayed slightly, didn’t do the dovish Fed bets any favours, as expectations of a soft print did not materialize, confounding the raft of weak job indicators seen in the prior week.

Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

US GDP and PCE inflation are main highlights, plus the Fed minutes. UK and Japan have busy calendars too with focus on CPI. Flash PMIs for February will also be doing the rounds. RBNZ meets, is unlikely to follow RBA’s hawkish path.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.