EUR/USD at Two-Week Lows Ahead of NFP Report
The US dollar has firmed through the week since finding a bottom on Monday, dragging EUR/USD down to levels not seen in two weeks. Technical support is within sight and the outcome of the US jobs report will ultimately determine if it will hold.
Analysts are expecting the unemployment rate in America to remain unchanged at 3.5% and a jobs gain of 162 thousand people. The forecast for average hourly earnings is for a tick up to 0.3%.
The ADP jobs report released on Wednesday came in better than expected with 202 thousand additional jobs in December versus the analyst estimate of 160 thousand.
Industrial production figures out of France and Italy both came in ahead of expectations earlier today although they did not have much of an impact on the currency pair.
The US dollar index (DXY) reversed from range lows at the start of the week and has rallied every day since. DXY has broken higher from a range that had contained it since December 30. The bullish break sets a strong tone for the dollar which has gained against all of the major currencies in the week thus far.
Several layers of support are within proximity for EUR/USD. On a 4-hour chart, the 200 moving average is in play. This is an indicator the exchange rate has not fallen below over the last month. The dip lower in late December was held higher by the same moving average.
EUR/USD is currently threatening a bearish break of the moving average, and if it breaks down, further support at 1.1078 is considered important.
On a daily chart, the 1.1078 price point has acted as both support and resistance and has triggered notable turns in the past. Further, a rising trendline comes into play and falls near the horizontal level.
The rising trendline is drawn connecting the October low with the lowest daily close in November.
While the support confluence in EUR/USD is significant, the dollar is dominating with momentum this week. This suggests that sellers will likely sell into any rallies next week that the support confluence might trigger.
- EUR/USD continues to remain under pressure as the dollar dominates the major currencies.
- Notable support for EUR/USD is within sight which stands to trigger a bounce in the currency pair.
- The US jobs report will be released later in the day and is likely to accompany volatility.
This article was originally posted on FX Empire