Heightened Risk from a Strong Non-Farm Payroll Release


Euro, US dollar and Bond Yields Talking Points:

  • US non-farm payrolls will steer EURUSD in the short-term.
  • Euro remains under pressure as a currency.

We have just released our Brand New Q4 Trading Forecasts including USD and EUR.

EURUSD – A Further Break Lower is Likely

EURUSD remains in a holding pattern ahead of the latest US labor and earnings report with market expectations looking for a stronger release to support the US dollar at its current level. Recent US data has been strong, especially the ADP report and the ISM non-manufacturing/services composite release, and any upside beat in either the jobs or wages component today will hit an already weak EURUSD.

Alternatively, a weaker-than-expected report will give the pair a small boost, but the underlying fundamental and technical outlook for EURUSD remains firmly pointed to the downside in the short-to-medium term.

A look at government bond spreads between the two show the 2-year US Treasury now offering over 330 basis points more than comparable German debt, while in the10-year space, the US offers around 265 basis points of extra yield. The widening of this yield differential will continue to draw flows towards the US dollar.

The daily chart shows support at 1.1509 broken – the late May/early June double touch – and the pair trading under all three moving averages. Fibonacci support at 1.1448 will offer some support ahead of the August 15 low at 1.1301. The downtrend from the September 24 high at 1.18154 remains in place.

IG Client Sentiment shows that retail are 55.5% net-long EURUSD. See what this means and how it can affect trading decisions.

EURUSD Daily Price Chart (November 2017 – October 5, 2018)

EURUSD Price: Heightened Risk from a Strong Non-Farm Payroll Release

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on EURUSD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.



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