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The latest U.S. jobs update is coming soon, which of course means a busy day for Dollar traders this Friday. And always, we’ll check out the most liquid currency pair, EUR/USD, for short-term opportunities to play the likely spike in volatility for the Greenback.

Intermarket Snapshot

Equity Markets Bond Yields Commodities & Crypto
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FTSE: 7030.87 -1.29%
S&P 500: 2895.08 +0.26%
DJIA: 26092.71 +0.05%
US 10-yr 1.548% -0.049
Bund 10-YR -0.59% -0.045
UK 10-YR: 0.474% -0.026
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Gold: 1502.50 +0.91%
Bitcoin: 8114.77 -2.82%
Etherium: 172.74 -4.51%

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Forex Calendar:

  • Australian Retail sales & Financial Stability Review at 2:30 am GMT (Oct. 4)
  • RBA Assistant Governor Ellis speaks in Geelong at 3:00 am GMT (Oct. 4)
  • U.S. Non-Farm Payrolls & Trade balance at 1:30 pm GMT (Oct. 4)
  • Canada Trade balance at 1:30 pm GMT (Oct. 4)
  • Canada Ivey PMI at 3:00 pm GMT (Oct. 4)

What to Watch: EUR/USD

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

In case you missed the USD Weekly Forecast, you should know that we’ll be getting the month U.S. employment update tomorrow, which will likely bring a short burst of volatility to the U.S. Dollar during the morning U.S. trading session. And if you haven’t caught up on the event yet, be sure to check out Forex Gump’s write-up, “Event Preview: U.S. NFP Report (September)

If interested in trading the event, it’s always a good idea to take on top tier catalysts with highly liquid assets to reduce slippage risk, and in this case the EUR/USD is almost always a great choice given that it is probably the most liquid currency pair.

So after reading Forex Gump’s event preview, if you’re fundamentally bullish on EUR/USD (i.e., bearish on the U.S. dollar short-term), then you may want to consider a break and retest of the 1.1000 before working on a long position. That area was a strong level of interest that once held as support before turning into resistance in September. The situation could reverse on bearish dollar sentiment, and if 1.1000 held as support once again, the next resistance area around 1.1060 – 1.1080 makes for a great short-term potential return-on-risk if using the daily ATR (around 60 – 65 pips) as your trade invalidation guide.

If you’re bearish on EUR/USD after reading the event preview guide, then shorting on a retest of that previously discussed strong area of interest around 1.1000 is something to consider. And given the level of potential volatility that may come, scaling into a short between 1.1000 to 1.1050 makes sense if working on a swing type trade rather than a short-term trade.  For a short-term setup, the potential return-on-risk looks better when waiting for a bounce up to the 1.1000 – 1.1020 area, but there’s nothing wrong with going with a preemptive short position now if you’re conviction is high that USD will rally. Although you should widen out your stop and going with a smaller position size if you do, and you can always scale into a larger position / roll stop if you turn out to be right.