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We getting into a new month, which means another look at a top tier economic report in the U.S. employment update! Will it bring continued U.S. dollar volatility and solidify the support break in EUR/USD?

Intermarket Snapshot

Equity Markets Bond Yields Commodities & Crypto
DAX: 12191.09 +0.02%
FTSE: 7563.57 -0.31%
S&P 500: 3001.75 +0.72%
DJIA: 27055.86 +0.71%
US 10-yr 1.976% -0.045
Bund 10-YR -0.454% -0.018
UK 10-YR: 0.587% -0.024
JPN 10-YR: -0.132% +0.026
Oil: 57.04 -2.63%
Gold: 1423.70 -0.98%
Bitcoin: 10018.00 -0.35%
Etherium: 213.40 -2.05%

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Forex Calendar:

  • Bank of Japan Monetary policy meeting minutes at 12:50 am GMT (Aug. 2)
  • Australia retail sales & PPI at 2:30 am GMT (Aug. 2)
  • Swiss CPI at 7:30 am GMT (Aug. 2)
  • U.K. construction PMI at 9:30 am GMT (Aug. 2)
  • European PPI & retail sales at 10:00 am GMT (Aug. 2)
  • Canada trade balance at 1:30 pm GMT (Aug. 2)
  • U.S. employment at 1:30 pm GMT (Aug. 2)

What to Watch: EUR/USD

EUR/USD 1-Hour Forex Chart
EUR/USD 1-Hour Forex Chart

The U.S. dollar got a boost yesterday after a not-so-dovish Fed didn’t deliver a “guarantee” of more rate hikes down the road after cutting the interest rate down to 2.25%. But the volatility may not stop there as we’ve got the latest U.S. employment update on Friday, which tends to bring a short-term lift in action to the Dollar and may other financial markets. And for this top tier economic event, it’s always best to play in the most liquid markets, which is why we’re checking out EUR/USD, the two most liquid currencies in the world.

So, right now there’s a strong case to be a bear given the bullish reaction to yesterday’s FOMC meeting, and also on the fact that the Greenback is now a “high-yielder” among the majors and that the U.S. economic is still relatively strong compared to the other major economies. And from a price action standpoint, the pair just broke below a strong support area just above the 1.1100 handle which could turn to resistance if retested. This area also lines up with the Fibonacci retracement area of the recent swing lower from 1.1160 to 1.1027, another argument for EUR/USD technical bears to watch and hop in. This is the area to watch for bearish reversal candles if retested after the U.S. NFP report, or if you’re a more aggressive trader, look to scale into a short position from the current levels up to that resistance area if you’re afraid of missing the trade.

For EUR/USD bulls, it’s going to take a pretty weak U.S. employment report update to break the Greenback rally, which the odds are looking to lean towards a weak update given the disappointing employment numbers from the latest weekly jobless claims and the just released ISM manufacturing PMI report. If we do see a bad number, slower wage growth, and/or downward revisions to previous numbers, then watch for a break and hold above of 1.1100 to start considering a long position.