Slobodan Drvenica
Windsor Brokers
EUR/USD
EURUSD remains firmly in red and trading near the lowest level in almost one month on Friday morning.
Bears eye key supports at 1.10 zone (psychological / Sep 11 higher low / Fibo 38.2% of 1.0601/1.1204 uptrend) break of which to generate reversal signal on breach of the floor of multi-week consolidation range and completion of a double-top pattern on daily chart.
Bears broke through initial Fibo support at 1.1069 (23.6%) and penetrated into ascending thick daily Ichimoku cloud (spanned between 1.1056 and 1.0933) with weekly close within the cloud to contribute to negative outlook.
Rising negative momentum and converging 10/20 MA’s in bearish setup and about to create a bear-cross, add pressure, but partially countered by oversold conditions and anticipated stronger headwinds from thick daily cloud and strong 1.10 support zone.
We look for firmer signals on sustained break below 1.10 zone or bounce and close above cloud top, which would ease immediate downside risk, further bullish signals to be expected on rally through converged daily Tenkan / Kijun-sen (1.1111/08).
Fundamentals work against Euro, as the ECB got more support for further rate cuts after inflation fell below 2% target, while EU composite PMI fell below 50 threshold in September, signaling contraction.
Release of US labor data for September is expected to play a key role today, with Nonfarm payrolls expected to rise moderately (Sep 147K f/c vs Aug 142K) average earnings to ease (Sep m/m 0.3% f/c vs Aug 0.4% and unemployment to remain unchanged at 4.2% in September).
If hiring in the US falls below expectations and particularly dips below 100K trigger, it will signal that US labor market is cooling and add to bets for another outsized Fed rate cut next month, providing strong support to the single currency.
Conversely, stronger than expected NFP numbers would inflate Dollar and increase pressure on Euro.
Res: 1.1056; 1.1069; 1.1110; 1.1144.
Sup: 1.1000; 1.0980; 1.0930; 1.0907.
Interested in EUR/USD technicals? Check out the key levels
The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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