EUR/USD has wiped a bulk of its weekly gain as it heads lower with the 1.1900 level once again proving to be a major hurdle. The exchange rate has mostly traded sideways for about a week now.
The trade-weighted dollar found buyers last Friday after hitting a fresh two week low. Traders made another attempt to push the greenback lower in the early week but this area in the dollar index is well supported, at least for now.
US jobless claims came in better than expected yesterday. This report had shown a decline in claims for 15 weeks in a row up until last week. The analyst estimate for yesterday’s report had suggested the improvement in the labor market may stagnate at this point, however, the positive report points a continued recovery in the US labor market.
Figures released earlier in the week painted a different picture. The ADP reported an additional 167 thousand new jobs in July, well below the analyst estimate for 1.2 million new jobs. However, the figures for June were adjusted up to show 4.31 million new jobs versus the originally reported 2.37 million.
Later today, the Bureau of Labor Statistics will release their version of employment change data. This is the most widely watched report when it comes to the US labor market and a volatile reaction is expected. Analysts are looking for a gain of 1.5 million jobs in July following a rise of 4.8 million jobs in June.
The level to watch, if EUR/USD continues lower, falls at 1.1767. This level has acted as both support and resistance on a 4-hour chart since late August.
Considering the broader trend, buyers are likely to defend this level. The exception might be if the jobs data deviates significantly from the analyst estimate.
While the 1.1900 level has been an obstacle, there has not been any indication of a reversal of trend at this stage. It might take a break below 1.1700 to suggest the near-term trend has changed.
- EUR/USD has moved sideways after a second unsuccessful attempt to break above 1.1900.
- The US non-farm payrolls report will be released later today, a volatile reaction in the markets is expected.
For a look at all of today’s economic events, check out our economic calendar.