EUR/USD: Proceed with caution
Hello traders.
The blowout NFP number has muddied the waters again.
Time to recalibrate. More jobs created, higher earnings, lower unemployment rate: all USD positives because the FOMC is now expected to cut only 25basis point on Nov 7th.
The "CME FedWatch" now places the probability of a 50 base point cut at 3.8%. Great for the USD but no so great for the increased probability of a "hard" landing for the US economy.
The ECB meets next week and the CPI numbers will be released just before the meeting. If the ECB keeps the rate at 3.65%, it may move the needle since the FOMC will likely still cut in November. It will hinge on what Ms. Lagarde says at the press conference.
In the meanwhile we still have FOMC minutes on Oct 9th and US CPI on Oct 10th.
On the technical side, there is significant support on the weekly and monthly charts between 1.0939 and 1.0950.
I am keeping an open mind on taking a long position from there but with a very tight stop.
On the upside, resistance is at 1.10, 1.1046 and 1.1083.
Lastly, the uptrend line on both the daily and weekly charts were broken but price closed just a hair above these lines.
Tread lightly. FX markets are extremely fluid.
The blowout NFP number has muddied the waters again.
Time to recalibrate. More jobs created, higher earnings, lower unemployment rate: all USD positives because the FOMC is now expected to cut only 25basis point on Nov 7th.
The "CME FedWatch" now places the probability of a 50 base point cut at 3.8%. Great for the USD but no so great for the increased probability of a "hard" landing for the US economy.
The ECB meets next week and the CPI numbers will be released just before the meeting. If the ECB keeps the rate at 3.65%, it may move the needle since the FOMC will likely still cut in November. It will hinge on what Ms. Lagarde says at the press conference.
In the meanwhile we still have FOMC minutes on Oct 9th and US CPI on Oct 10th.
On the technical side, there is significant support on the weekly and monthly charts between 1.0939 and 1.0950.
I am keeping an open mind on taking a long position from there but with a very tight stop.
On the upside, resistance is at 1.10, 1.1046 and 1.1083.
Lastly, the uptrend line on both the daily and weekly charts were broken but price closed just a hair above these lines.
Tread lightly. FX markets are extremely fluid.
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