The Euro/US Dollar is trading within a narrow range ahead of US data today. This week, the USD is expected to post a higher than expected jobs report, which should lift sentiment and support the greenback. Meanwhile, the EUR/USD is likely to be pressured by the upcoming EU GDP release, which is forecast to post a slower than expected reading. This, in turn, will likely weigh on sentiment and support the greenback.
Markets tend to benefit from a positive tone when there is a lot of data due to its impact on the confidence of traders. The Euro to Dollar Forex pair usually trades around its daily price range, and looks to break out of the trading range to the upside when we see a positive tone in the market.
Today, August 30th, the EUR/USD pair have seen a sell-off that has pushed the pair away from the upper side of the price range and back to the 50 day moving average. Our technical analysis shows that the price has been pressured by the sell-off this morning and is now in a short-term down trend.
- The dollar strengthens as the Federal Reserve prepares for the future.
- Data on the National Employment Program (NEP) is awaited.
- Traders are waiting for news, therefore markets are cautious.
The Euro currency market, which trades against the US Dollar, has been under pressure today as the Dollar regains strength ahead of today’s publication of the Non-Farm Payrolls (NFP) data. According to rumors from the Federal Reserve, tapering may begin sooner than anticipated. The Dollar has risen as a result of this key reason. According to experts, up to 845,000 jobs may have been created in the last month. Meanwhile, on Wall Street, pre-market trading remained cautious as most investors awaited new data.
The increase in Treasury yields is beneficial to the dollar.
Those forex traders who were trading the US Dollar this week were greeted with a stronger currency as a result of a few important reasons. These primarily involve increasing treasury rates, which have been at historically low levels for a long time. Another problem is the widespread belief that the Fed would begin tapering its bond-buying program sooner than anticipated, despite the fact that this has yet to be stated or verified.
Both of these problems have led the USD to rise ahead of today’s jobs data. They may also be seen as good indicators of a recovering economy. However, there are still some reservations about the COVID-19 case number. This has continued to rise and is currently above 100,000, the highest level in many months.
The Next Key Driver is Job Numbers.
The Labor Department’s statistics are the most significant to be published today. These are the employment figures from the NFP. Analysts’ predictions for where this figure will land are all over the map. These estimates vary from a low of 350,000 to a high of 1.2 million jobs. The central estimate is that 845,000 jobs were added in the previous month.
Forex brokers will be anticipating market action based on the figure that is released. Anything too low would indicate a sluggish continuation of the economic recovery. A high figure, on the other hand, may heighten concerns about inflationary pressures and prompt demands for rate hikes and tapering to begin immediately.
Early in the trading day, caution prevails.
It’s the same scenario on Wall Street, with traders taking a cautious, wait-and-see attitude in the early hours of the pre-market. All of the main indexes’ futures trade is flat, with most investors preferring to wait for news.
This comes after a strong finish to yesterday with the Dow Jones, S&P 500, and NASDAQ all ending the day in positive territory, and closing in on a positive week overall. The key issues impacting whether the week can end on a positive note are still the NFP job numbers and any further news on Fed policy which will be closely watched.
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