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Major currencies ease as US index futures rise

The EURUSD pair dropped 0.36% to 1.1556 on Wednesday, October 6. The euro came under pressure against all currencies amid rising UST yields, strengthening of the dollar and a decline in US stock indices.

After a drop in the yield on 10-year USTs to 1.508% from 1.573%, the DXY index fell to 94.19. Sentiment shifted for the main pairs as well as an upward correction began for all currency pairs, which lasted up until the close.

US indices rebounded on signs that Republicans might be willing to cut a compromise on the debt ceiling crisis. Gains in stock indices also strengthened bullish sentiment for risk-sensitive assets.

Today’s macro agenda (GMT+3)

  • 14:30 Eurozone: report on ECB monetary policy meeting
  • 15:30 US: initial jobless claims
  • 15:40 US: Fed member Williams speech
  • 17:00 Canada: Ivey PMI (September)
  • 19:00 Canada: BoC Governor Tiff Macklem speech
  • 21:00 US: consumer credit change

Current outlook

By the time of writing, major currencies were all trading in positive territory. The euro was trading at 1.1567, while the DXY stood at 94.25. The dollar drew support from rising 10-year UST yields, as well as traders' expectations for Friday’s NFP data.

Yesterday’s ADP showed that US private sector jobs rose more than expected in September. The NFP report will be the Fed’s key gauge in the timing for winding down its bond buying program.

Technical analysis

US index futures are trading in positive territory. European markets should theoretically open higher for major currencies. The DXY is hovering around 94.10. When the designated level is reached, many traders will notice a double top pattern on the 4h TF. It will shape up when the index drops below 94.05.

The EURUSD pair halted its decline at the 90-degree angle of the Gann fan (1.1532). The rebound was 38.2% of the fall from 1.1613 to 1.1529 and 23.6% of the downward move from 1.1640 to 1.1529. If the correction picks up momentum from the low of 1.1529, there would be a chance for the key pair to reach the target band of 1.1575-1.1585. With support from crosses and further increases in the stock indices, the resistance level will be located at 1.1605.

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