EURUSD: markets preparing for the NFP report

On Wednesday the 2nd of October, trading on the euro closed up at 1.0959. The euro’s rise was helped along by weak US data. The ADP employment report missed expectations, along with the ISM manufacturing index for September, which dropped from 49.1 to 47.8.

The index fell over investor fears of an economic slowdown. US shares dropped in response to a decline in US bond yields. US10Y bond yields dropped to 1.5824%.

Day’s news (GMT+3):

  • 10:50 France: Markit services PMI (Sep).
  • 10:55 Germany: Markit services PMI (Sep).
  • 11:00 Eurozone: Markit services PMI (Sep).
  • 11:30 UK: Markit services PMI (Sep).
  • 12:00 Eurozone: PPI (Aug), retail sales (Aug).
  • 15:30 US: initial jobless claims (27 Sep).
  • 16:45 US: Markit services PMI (Sep).
  • 17:00 US: ISM non-manufacturing PMI (Sep), factory orders (Aug).
EURUSD H1

Current situation:

On Wednesday, just as on Tuesday, the EURUSD pair reversed upwards on the back of US data. The volume gap from the 30th of September and 1st of October was filled. For the bulls, the road towards 1.10 is now open. The pair has exited the channel and the bulls are now dominating the hourly timeframe. The only thing that can stop them now is Friday’s NFP report. There’s a support at 1.0922. Let’s also not forget that there’s a lot of conflicting background noise (Brexit, US tariffs on European goods, loose ECB monetary policy, and the broadly weaker US dollar). Any of these could cause a sharp reversal.

We’re forecasting sideways movement ahead of the release of the NFP report. Since the manufacturing PMI fell short of expectations, reaction to the NFP will be strong. This means that markets need to prepare for it. The ISM non-manufacturing index for September is coming out at 17:00. The service industry has a bigger influence on the market than the manufacturing sector.

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