The EURUSD pair closed the day 0.11% higher at 1.1876 on Thursday, August 6. After rising to 1.1916 in the morning, buyers failed to rally above the Asian high. By the US session, the price dropped to 1.1818.
FX players were unable to sidestep gyrations, as US lawmakers again stopped short of reaching a consensus on the new fiscal stimulus package. Sino-US relations have deteriorated significantly. The price recovered to 1.1894 before the close of the daily candlestick, while Asian market participants derailed the upward trend by pushing the price down to 1.1820.
Today’s macro agenda (GMT+3)
Our expectations for a pullback to the 67th degree were fully justified. The balance line acted as support, but now the price action is below the line, which implies that bearish sentiment is on the rise.
Today, on Friday, August 7, investor attention will be focused on US labor market data for July (nonfarm payrolls), as well as the results of the congressional debate on a new fiscal stimulus package for the US economy. Lawmakers have pledged to finalize the stimulus bill before the summer recess begins.
On the day of payrolls, we abstain from making a forecast, but the overall technical picture points to an upsurge above 1.1900. Should the US labor market add more than 2.0 mln jobs, the US dollar will gain temporary support. However, if the reading comes in below 1.5 mln, the decline can be expected to accelerate. The market’s reaction to the report could be mixed given that traders diverge in their assessment about when the dollar is a defensive asset and when it is not.