EUR/USD Analysis:

  • NFP Aftermath: EUR/USD trades lower after US economy adds 1.371 million jobs
  • Unemployment drops below 10% for the first time since the start of the coronavirus
  • Long-term symmetrical triangle intact as negative divergence hints at a potential EURUSD reversal
  • IG Client Sentiment data leans towards lower EUR/USD movement based on recent increase in longs

NFP Data update: Dollar Positive

The US economy received a boost as it expanded by 1.371 million jobs and recorded an unemployment rate of 8.4%, beating expectations of 9.8%. For the real time report, refer to US Dollar Swings on NFP Report Beat, Unemployment Below 9%

EUR/USD Price Analysis: NFP data Pushes EURUSD Closer to Key Support

EUR/USD Showing Signs of Continued Bearish Momentum

The EUR/USD currency pair has continued trading lower, boosted by the dollar positive jobs data. It now trades toward channel support as well as horizontal support. Yesterday’s extended candle wick indicated a rejection of lower prices however, added momentum off the back of the better than expected NFP may result in a retest of this area of confluence.

In further support of a continued move lower, is the appearance of negative divergence on the RSI, as price made higher highs while the indicator made lower highs. The initial litmus test remains the zone around 1.1790 which then brings into focus the 1.1760 level, however, the psych level of 1.1700 remains key to entertaining the idea of a reversal.

EUR/USD Daily Chart: Bearish Momentum Faces Zone of Support

EUR/USD Price Analysis: NFP data Pushes EURUSD Closer to Key Support

Should Bulls push price higher from here, the 1.1920 level becomes the nearest level of resistance before the 1.1965 level and upper side of the long term symmetrical triangle (yellow line) come into focus.

EUR/USD Monthly Chart: EURUSD Trades Back Within Symmetrical Triangle

EUR/USD Price Analysis: NFP data Pushes EURUSD Closer to Key Support

Chart prepared by Richard Snow, IG

Learn how to identify and apply the three main triangle patterns

Risk Events Ahead: Volatility expected to continue into next week

The Eurozone is set to start the week off with its 3rd estimate for the Q2 GDP growth rate on Tuesday, followed by the ECB interest rate decision and press conference a little later on in the week.

Friday sees the US release the core inflation rate for August – this comes after J. Powell’s address at the Jackson Hole Symposium where he announced that the Federal Reserve are to adopt a looser monetary policy framework in the form of Average Inflation Targeting

EUR/USD Price Analysis: NFP data Pushes EURUSD Closer to Key Support

For all market-moving data releases and events see the DailyFX Economic Calendar

  • EUR/USD retail trader data (at the time of writing) shows 43.98% of traders are net-long with the ratio of traders short to long at 1.27 to 1.
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short, hints that EUR/USD prices may continue to rise.

  • The number of traders net-long is 1.96% higher than yesterday and 54.41% higher from last week, while the number of traders net-short is 1.37% lower than yesterday and 10.42% lower from last week.
  • Recent changes in sentiment warn that the current EUR/USDprice trend may soon reverse lower despite the fact traders remain net-short.

Change in Longs Shorts OI
Daily-19%-10%-14%
Weekly38%-14%2%

— Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX





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