Is the EUR/USD headed for 1.1900, driven by NFPs, for the weekly close?
Source: Economic Events August 7, 2020 - Admiral Markets' Forex Calendar
The Euro continued to profit from ongoing US dollar weakness and the drift lower in US Treasury yields which closed at new all-time lows.
In fact, the USD weakness for the start of this trading week may come as a surprise to some after recent US economic projections. Some, like Monday's ISM Manufacturing data set, continued to improve, coming in at 54.2 in July against an expected 53.6, with new orders having risen sharply (61.5 vs 56.4 in June).
Traders were probably smelling something fishy given the failed attempt for US yields to gain momentum and, in fact, Wednesday's ADP payrolls saw a huge miss, rising by a meagre 167,000 compared to an expected 1.2 million, showing that only 40% of lost jobs have been recovered out of the total 19.7 million jobs lost since March and due to the Corona lockdown.
So, with expectations rising that the Fed will continue to weaken the US dollar by putting further pressure on US yields as they are expected to go for a run as low as 0%, which leaves the US dollar in a lose-lose situation. If better-than-expected NFPs don't deliver the fuel for a EUR/USD correction, disappointing NFPs (which are likely, given the ADP miss) could accelerate the move higher in the currency pair, pushing the EUR/USD towards 1.1900 into the weekly close.
Nevertheless, from a trader's perspective, we'd prefer a short-term correction towards 1.1400/30 since this would deliver a trading setup with a more attractive risk-reward ratio.
Technically, the mode stays bullish on a daily time-frame as long as we trade above 1.1150/1200:
Source: Admiral Markets MT5 with MT5-SE Add-on EUR/USD Daily chart (between June 7, 2019, to August 6, 2020). Accessed: August 6, 2020, at 10:00pm GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.
In 2015, the value of the EUR/USD fell by 10.2%, in 2016, it fell by 3.2%, in 2017, it increased by 13.92%, 2018, it fell by 4.4%, 2019, it fell by 2.2%, meaning that after five years, it was down by 7.3%.
Discover the world's #1 multi-asset platform
Admiral Markets offers professional traders the ability to trade with a custom, upgraded version of MetaTrader 5, allowing you to experience trading at a significantly higher, more rewarding level. Experience benefits such as the addition of the Market Heat Map, so you can compare various currency pairs to see which ones might be lucrative investments, access real-time trading data, and so much more. Click the banner below to start your FREE download of MT5 Supreme Edition!
Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The analysis is published for informative purposes only and are in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
- Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter "Author") based on the Author's personal estimations.
- To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures refer that refer to any past performance is not a reliable indicator of future results.
- The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies therein or that losses in connection therewith may or shall be limited.
- Any kind of previous or modeled performance of financial instruments indicated within the Publication should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- The projections included in the Analysis may be subject to additional fees, taxes or other charges, depending on the subject of the Publication. The price list applicable to the services provided by Admiral Markets is publicly available from the website of Admiral Markets.