Key economic events on Thursday and Friday, including Japan's BOJ Policy Rate, Canada's GDP data, and the US Core PCE Price Index and Unemployment Claims, are set to provide insights into economic health across regions. Friday's Nonfarm Employment Change and ISM Manufacturing PMI in the US will be closely watched for further indications of labor market conditions and manufacturing strength. The EURUSD remains in a downtrend in technical analysis, with potential support and resistance levels suggesting key price targets. Fundamentals show a strengthening US dollar, influenced by political shifts and recent JOLTS data indicating a gradually cooling labor market, fueling speculation about a possible Federal Reserve rate cut in November.
Overview
Key economic events on Thursday and Friday, including Japan's BOJ Policy Rate, Canada's GDP data, and the US Core PCE Price Index and Unemployment Claims, are set to provide insights into economic health across regions. Friday's Nonfarm Employment Change and ISM Manufacturing PMI in the US will be closely watched for further indications of labor market conditions and manufacturing strength. The EURUSD remains in a downtrend in technical analysis, with potential support and resistance levels suggesting key price targets. Fundamentals show a strengthening US dollar, influenced by political shifts and recent JOLTS data indicating a gradually cooling labor market, fueling speculation about a possible Federal Reserve rate cut in November.
Key Economic Events
Wednesday 02:30 am (GMT+2) - Australia: CPI q/q (AUD)
Wednesday 14:15 (GMT+2) - USA: ADP Nonfarm Employment Change (USD)
Wednesday 14:30 (GMT+2) - USA: Advance GDP q/q (USD)
Thursday 03:30 am (GMT+2) - China: Manufacturing PMI (CNY)
Thursday 04:30 am (tent) (GMT+2) - Japan: BOJ Policy Rate (JPY)
Thursday 14:30 (GMT+2) - Canada: GDP m/m (CAD)
Thursday 14:30 (GMT+2) - USA: Core PCE Price Index m/m (USD)
Thursday 14:30 (GMT+2) - USA: Unemployment Claims (USD)
Friday 14:30 (GMT+2) - USA: Nonfarm Employment Change (USD)
Friday 16:00 (GMT+2) - USA: ISM Manufacturing PMI (USD)
Technical Analysis
After a significant decline in October, the EURUSD paused amid substantial Job Openings and Labor Turnover Survey (JOLTS) declines. While the currency pair remains in a prolonged downtrend, recent developments ahead set the stage for a potential correction to the upside. Specifically, the trough at 1.07682 failed to drop below the previous trough, and prices are eying the peak at 1.08387. A decisive breach above 10.08387 will pave the way for higher exchange rates.
Meanwhile, the EURUSD remains in a downtrend supported by several technical indicators. Specifically, prices are below the 50-period Exponential Moving Average (EMA), indicating a downtrend. Also, the Momentum oscillator records values below the 100 baselines while the Relative Strength Index marks values below 50, suggesting continued selling pressure in the near term.
Potential Upside Targets
Should the bulls take market control, traders may direct their attention toward the four potential resistance levels below:
1.08387: The initial resistance is 1.08387, which aligns with the swing high reached on October 25.
1.08823: The second price target is identified at 1.08823, corresponding to the 161.8% Fibonacci Extension drawn from the swing high of 1.08387 to the swing low of 1.07607.
1.09528: The third target is established at 1.09528, aligning with the 261.8% Fibonacci Extension drawn from the swing high of 1.08387 to the swing low of 1.07607.
1.10020: An additional price target is estimated at 1.10020, corresponding to the daily low from September 11.
Potential Downside Targets
Should the sellers maintain market control, traders may consider the four potential support levels listed below:
1.07607: The first level of support is identified at 1.07607, representing a daily low formed on October 23.
1.07125: The second support level is 1.07125, reflecting the 161.8% Fibonacci Extension from the low point of 1.07607 to the high point of 1.08387.
1.06600: The third support level is identified at 1.06600, representing the 261.8% Fibonacci Extension drawn from the swing low of 1.10020 to the swing high of 1.121.34.
1.06345: An additional downward target is observed at 1.06345, corresponding to the 261.8% Fibonacci Extension drawn from the swing low of 1.07607 to the swing high of 1.08387.
Fundamentals
The US dollar is gaining strength as investors see it as a proxy for a potential shift in the upcoming presidential election. Market analysts point out that the election could be the most impactful event for the dollar this year, with recent polling shifts contributing to the currency's sharp rise. Markets appear to view the potential for increased tariffs, inflationary pressures, and effects on trade-sensitive currencies as supportive factors for continued dollar strength.
On another note, the latest JOLTS report shows a substantial decline in job openings for September, marking the lowest level since early 2021, alongside a slight rise in the hiring rate and a drop in the quits rate. This suggests a gradual cooling in labor demand rather than any sharp downturn, with stable hiring trends indicating a steady if softer, labor market. Analysts caution that upcoming employment data may be skewed by recent strikes and natural disruptions. Key economic indicators such as moderating wage growth, stable productivity, and cautious consumer spending are seen as supportive of a gradual easing approach by the Federal Reserve, with a possible 25 basis point rate cut on the table for November to aid in reaching the inflation target.
Conclusion
In conclusion, with significant economic events and data releases this week, markets remain focused on signals from labor and inflation indicators, which could guide the Federal Reserve's next moves. The technical downtrend in EURUSD persists, while the US dollar continues to strengthen, supported by both economic fundamentals and potential political shifts. Traders will watch closely for any deviations in key metrics that might prompt adjustments in the Fed's easing strategy.