EURUSD Is Stable Early In the Week
By Dmitriy Gurkovskiy, Chief Analyst at RoboForex
After plummeting last Thursday and Friday, EURUSD reached stability and began the new month more or less quietly. Risks of further decline are still here, but probably won’t materialize today.
On Monday, US markets are closed due to the Labor Day celebration. European releases were minor in impact on Monday, leading us to believe that stability will continue in the interim.
This week, Washington may announce an extension of import duties on Chinese goods worth roughly $50 billion USD. The list includes quite a wide range of items. Tightening of import duties may cause reactions in the Yuan and “safe haven” currencies as trade-war risks linger.
At the end of the week, the US is scheduled to report on its monthly employment report. As a rule, EURUSD is very sensitive to this data and this time market expectations are really strong: the Unemployment Rate is expected to remain at 3.9%, while the Average Hourly Earnings may continue growing steadily and add 0.3% m/m. The Non-Farm Employment Change is expected to be 191K after rising 157K the month before.
As usual, the stronger the numbers, the better for the USD.
As we can see in the H4 chart of EURUSD, after breaking the support line of the rising channel, the pair started a new downtrend. This raises the question, “is it a reverse or just a correction?”, which can be answered only after the price reaches some particular levels. The initial descending channel was steady, but rather weak. However, after the pair broke its support line, the channel started moving more rapidly. Right now, the instrument is testing the broken support line. If the price breaks the resistance line at 1.1630 and enters its previous channel, the pair may grow to reach the next resistance level at 1.1680, thus not only starting a new ascending impulse, but continuing the mid-term uptrend as well. Still, if the price continues moving inside the current channel, then falling towards the support line at 1.1535 and breaking it will confirm the scenario that implies a reverse.
Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.