Key Points
- EURUSD starts October on the back foot and is not far away from its most negative week since April.
- All eyes are on tomorrow’s Non-Farm Payroll report to help clear some confusion about how aggressive the Federal Reserve will be.
- Traders flock to safe-haven bets such as the US Dollar as the Middle East is on the brink.
- EURUSD begins its bearish reversal, how far could it fall?
Market Overview
EURUSD has started October firmly on the back foot, giving up over 100 pips in just two days of trading. In truth, this pair has been consolidating since the middle of August and is threatening to test 1.10000. However, there are some crucially important stories to keep up with to determine where this pair could be headed in the next few days.
All Eyes On A BIG Week For US Employment
Markets have experienced higher volatility than usual in the lead-up to an NFP day due to the escalation in the Middle East. Iran’s recent attack on Israel is a considerable escalation in the Middle East conflict, and traders have been flocking to safe-haven bets such as the US Dollar. This week is crucial for the US labor market, with US Non-Farm Payrolls Day on Friday. After the Federal Reserve opted for a 50bps rate cut in its previous meeting, Jerome Powell stated he did not want to see any more weakening in the labor market.
Therefore, should the Non-Farm Employment Change come in a lot weaker than the 142k forecast and a higher unemployment rate, expect more fear to enter the markets, and EURUSD could catch a bid. However, should the report become stronger, the dollar will likely continue its recovery, and EURUSD will likely keep falling.
EURUSD Begins Its Reversal
The price of EURUSD currently trades at 1.10430 and has been in a 100-pip range between 1.10000 and 1.20000 since the middle of August. However, there are increasing signs that the bullish momentum is fading for now.
There has been a successful liquidity sweep at the top of this range on Wednesday, 25th September. Since then, the price has made a decisive move toward the bottom of the range, and how it reacts with the sell-side liquidity line is crucial. Should the price “wick” below 1.10000 and close back inside the range, then there could be a move back toward 1.15000. However, if there is a full candle closure below 1.10000, then EURUSD could confirm a new bearish trend.
Risk Disclosure: The information provided in this article is not intended to give financial advice, recommend investments, guarantee profits, or shield you from losses. Our content is only for informational purposes and to help you understand the risks and complexity of these markets by providing objective analysis. Before trading, carefully consider your experience, financial goals, and risk tolerance. Trading involves significant potential for financial loss and isn't suitable for everyone.
