Current trend

The EUR/USD pair shows mixed dynamics, located near 1.1033 and local lows from September 12, updated the day before. Investor activity remains low at the end of the week in anticipation of the publication of the September report on the US labor market, which could have a key impact on financial authorities when making decisions in the area of monetary policy.

The probability that the Fed will adjust the interest rate by only –25 basis points in November after –50 basis points in September is now 65.0%. Previously, analysts expected a more rapid decline in the rate, but after the speech of the Chair of the US Federal Reserve, Jerome Powell, at the beginning of the week, they changed their forecasts. The official spoke out against the accelerated easing of monetary parameters, which, in his opinion, could create additional risks for the economy. Preliminary estimates for the labor market report suggest a slight slowdown in Nonfarm Payrolls in September from 142.0 thousand to 140.0 thousand, while Average Hourly Earnings could decline from 0.4% to 0.3% month-on-month and remain at 3.8% year-on-year.

The data published in the US yesterday turned out to be mixed: the dollar's position was supported by statistics on the Services PMI from the Institute for Supply Management (ISM), which rose in September from 51.5 points to 54.9 points, while experts expected 51.7 points. At the same time, Initial Jobless Claims for the week ending September 27 rose from 219.0 thousand to 225.0 thousand, ahead of expectations of 220.0 thousand, and Industrial Orders in August fell 0.2% after increasing by 4.9%.

European business activity data also came in better than expected, with the S&P Global eurozone Services PMI rising from 50.5 points to 51.4 points in September, and the Composite PMI rising from 48.9 points to 49.6 points. European Central Bank (ECB) Vice President Luis de Guindos believes that economic growth in the region may slow down in the short term, but the situation will change over time, as positive dynamics of real incomes and gradual erosion of the effects of restrictive monetary policy should support consumption and investment, while an increase in exports and a recovery in the manufacturing sector could also strengthen the economy.

Support and resistance

On the daily chart, Bollinger Bands are trying to reverse into the descending plane. The price range is expanding, but it fails to keep pace with the "bearish" activity of recent days. MACD is going down preserving a stable sell signal (located below the signal line). In addition, the indicator is trying to consolidate below the zero level. Stochastic, having reached its lows, reversed into the horizontal plane, indicating risks of oversold euro in the ultra-short term.

Resistance levels: 1.1050, 1.1100, 1.1150, 1.1200.

Support levels: 1.1000, 1.0964, 1.0930, 1.0900.

Trading tips

Short positions may be opened after a breakdown of 1.1000 with the target at 1.0900. Stop-loss — 1.1050. Implementation time: 2-3 days.

The return of the "bullish" trend with the breakout of 1.1050 may become a signal for new purchases with the target of 1.1150. Stop-loss — 1.1000.