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EUR/USD: Still Waiting For A Breakout; Levels & Targets - JP Morgan
EUR/USD keeps on bouncing back and forth in a range between 1.1113/20/29 (pivot/minor 76.4 %/pivot) and 1.0763/44 (daily trend/int. 76.4 %) which needs to be broken to receive fresh directions, says JP Morgan.
"A break below the main T-zone at 1.0763/44 would re-open Pandora's Box in terms of resuming the long-term downtrend. In this case 1.0072 (76.4 % of the 2000-2008 rally) would only be a minimum target," JPM projects.
"A break above 1.1129 would on the other hand open the door for a minimum recovery to 1.1288 (minor 76.4 %)," JPM adds.
The euro recorded a minor increase against the dollar on Wednesday. The session was dynamic as the single currency failed to offset losses from the previous two days. If bullish sentiment strengthen its influence it is very likely soon to be made a test of resistance at 1.1004. Trading on Wednesday was open at a price of 1.0880 as early trend was negative. Around noon direction changed and currencies peaked for the day at 1.0923. The day ended with 18 pips below.
EUR/USD: Trading the US Non-Farm Payrolls
US Non-Farm Employment Change measures the change in the number of newly employed people in the US, excluding workers in the farming industry. A reading which is higher than the market forecast is bullish for the dollar.
Here are the details and 5 possible outcomes for EUR/USD.
Indicator Background
Job creation is one of the most important leading indicators of overall economic activity. The release of US Non-Farm Employment Change is highly anticipated by the markets, and an unexpected reading could affect the direction of EUR/USD.
The indicator fell sharply in June, coming in at 223 thousand. This was short of the forecast of 231 thousand, and has raised some uncertainty about when the Fed will raise interest rates. The forecast for the July reading stands at 220 thousand. Will the indicator rebound and beat the prediction?
Sentiments and levels
The Greek crisis has receded, after plenty of drama and high-stake poker playing. This is good news for the euro, but Greece’s debt isn’t going to disappear, so tough decisions will have to be made at a later date. Over in the US, better numbers in Q2 are feeding rising speculation that US rates will rise, perhaps as early as September. So, the overall sentiment is neutral on EUR/USD towards this release.
Technical levels, from top to bottom: 1.1290, 1.1190, 1.1050, 1.0865, 1.0815 and 1.0760.
5 Scenarios
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EUR/USD inches up for second straight day, ahead of U.S. jobs report
EUR/USD inched up extending modest gains from the previous session, as U.S. Treasury prices surged ahead of Friday's critical national employment situation report.
The currency pair traded in a range of 1.0875 and 1.0942 before settling at 1.0922, up 0.15% on the session. The euro has been relatively flat against the dollar over the last month, down approximately 0.6% during the last 30 days of trading. Despite the modest gains, EUR/USD has still remained below 1.10 for each of the last eight sessions.
The pair likely gained support at 1.0808, the low from July 20 and was met with resistance at 1.1114, the high from July 31.
Investors await the release of Friday's job report by the Labor Department's Bureau of Labor Statistics for further indications on the timing of the Federal Reserve's first interest rate hike since 2006. On Wednesday, Fed governor Jerome Powell said it is not a certainty that the Federal Open Market Committee will raise rates during its September meeting, as many investors anticipate. Powell added that he will take a data-driven approach to the decision on whether to normalize monetary policy, placing particular emphasis on the strength of the labor market.
Also on Wednesday, staffers from the research institute ADP said in its monthly national employment report that private payrolls in the U.S. rose by 185,000 in July, below forecasts of a 210,000 gain and down from an increase of 237,000 a month earlier. For the month of July, analysts are predicting a consensus increase of 212,000 non-farm jobs, below the robust gains in June when non-farm payrolls rose by 223,000. Economists also expect the unemployment rate to remain in a consensus range between 5.2 and 5.4%, after falling 0.2% to 5.3% in June.
The U.S. Dollar Index, which measures the strength of the greenback against a basket of six other major currencies, fell 0.10% to settle at 97.88 on Thursday afternoon. One session earlier, the index surged to an intraday high of 98.33 – its highest level since April 23.
Yields on the U.S. 10-Year, meanwhile, fell four basis points to 2.227% as Treasury prices shot up in Thursday's session. It has been more than two weeks since Treasury yields have closed above 2.3%.
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Germany's Industrial Output Dives in June
Industrial output in the euro area's powerhouse significantly shrank in June, according to the latest report from the German Federal Statistical Office (Destatis) released on Friday.
Industrial output in Germany posted1.4% negative growth in the reported period, seasonally adjusted, after reporting a flat growth in the preceding month, according to Destatis. Market analysts had expected 0.3% growth.
In annual terms, production added 0.6% in the sixth month of the year, compared to a revised 2.4% gain seen in the previous month, while markets had projected 2.2% growth.
Factory orders
Meanwhile, factory orders in Germany took off at full pace in June on a monthly and seasonally adjusted basis, official data revealed on Thursday, pointing to a positive period ahead for German business.
Industrial orders in the euro area's number one economy grew 2.0% in June, measured on a monthly and seasonally adjusted basis, while analysts had expected the reading to post a mere 0.1% growth. In the previous month, the gauge shrank a revised 0.3%.
On a yearly basis, the gauge gained 7.2% in the reported month, after posting a revised 4.5% advance in the previous month, measured on a non-seasonally adjusted basis. Markets had projected an advance of 4.9% year-on-year in June.
Manufacturing PMI in July
Meanwhile, the German manufacturing sector saw a slight decrease in its pace of growth in July with the respective PMI reading coming in below the previous month's results, final data confirmed on Monday.
July's final PMI for the manufacturing sector saw a small downtick to 51.8 from June's final reading of 51.9 points.
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lets see how the market will react today to the NFP forodafor n
Lets see how the market will react to the NFP , the forecast is there are no changes in the numbers Lets see hohow
EUR/USD: Dollar Gains on Decent Payrolls
US payrolls posted a 215,000 jobs gain, around June's level, while analysts had expected 225,000. The previous number was upwardly revised to 231,000.Moreover, the unemployment rate remained at 5.3%, while wage growth came out at 2.1% year-on-year, up from 2.0% in the previous month.The pair was volatile and dropped around 60 pips to $1.0880, fresh daily lows. From the euro perspective on Friday, worse-than-expected German industrial production data sent the currency lower against the US dollar, although losses were only marginal.Meanwhile, industrial production in France surprised negatively as well, with the monthly change for June dropping below zero to print -0.1%, while it decreased from 2.5% to 0.6% year-on-year.On Wednesday, the non-manufacturing composite index for July sharply improved from 56.0 to 60.3, the Institute for Supply Management reported.
EUR/USD recorded a weak growth record on Thursday. The positive session on Wednesday was extended, but the pair still remains below the resistance at 1.1004. It is expected that this level soon to be overcome, having in mind that short-term indicators are in favor of the single currency. The dynamic trade on Thursday launched at a price of 1.0905, as the peak of the day was recorded early in the morning at level 1.0942. The day ended at 19 pips higher.
EUR/USD posts third straight winning session amid solid U.S. jobs report
EUR/USD rose considerably on Friday extending its winning streak to a third straight session, as steady gains in the U.S. labor market last month bolstered the case for a September interest rate hike by the Federal Reserve.
The currency pair traded in a range between 1.0856 and 1.0978 during Friday's session, before settling at 1.0961, up 0.0037 or 0.34%. Despite the minor rally at the end of this week, EUR/USD still closed the week virtually unchanged declining by less than 0.10% from its level at the start of Monday's trade. Over the last month, the dollar has gained approximately 0.80% against its European counterpart.
EUR/USD likely gained support at 1.0808, the low from July 20 and was met with resistance at 1.1131, the high from July 27.
On Friday morning, the U.S. Department of Labor's Bureau of Labor Statistics said the number of non-farm payrolls in the nation during the month of July increased by 215,000, in line with consensus estimates of a 212,000 gain. The figure received a boost from a 60,000 gain in Trade & Transportation jobs, as well as a 40,000 increase in Professional & Business service positions. The Labor Department also upwardly revised non-farm payrolls for June by 8,000 to 231,000.
In addition, waged ticked up by 0.2 % after remaining flat in June – representing an increase of 2.1% on a year-over-year basis. The unemployment rate remained unchanged at 5.3%, also in line with consensus estimates of 5.3%. Earlier this week, Fed governor Jerome Powell said he would take a data-driven approach to the timing of a September rate hike, placing particular emphasis on the strength of the labor market over the next month.
The U-6 unemployment rate, a broader gauge of the national employment situation, inched down 0.1% to 10.4% on the moth. The reading, which measures the total level of unemployed workers plus those marginally attached to the labor force, as well as those who are no longer looking for a job but have looked for one over the last 12 months, stood at 12.6% last July. By comparison, the U-6 rate peaked above 17% during the height of the financial crisis. It is also a preferred measure of Fed chair Janet Yellen, as she weighs whether the labor market has improved to the point which would warrant an imminent rate hike.
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