EUR/USD Forecast: Mildly Positive In The Short-Term But Holding Below A Critical Fibonacci Level

EUR/USD Current Price: 1.1743

• US politics continue to discuss an aid package but remain apart, according to House Pelosi.
• The focus nos shifts to the September US Nonfarm Payroll report.
• EUR/USD mildly positive in the short-term but holding below a critical Fibonacci level.

Currencies were quite volatile this Thursday, as contradictory headlines regarding a US stimulus package and Brexit kept investors on their toes. The dollar ended up losing ground against most major rivals, with the EUR/USD pair finishing the day around 1.1740 after reaching a fresh weekly high of 1.1769. US political leaders have continued to discuss a possible stimulus package but to no avail. According to the latest headlines, House leader Nancy Pelosi said that they are still far apart on state and local aid, although she added that talks with Treasury Secretary Steven Mnuchin were constructive.

EU data was generally weak, as the unemployment rate resulted at 8.1% in August as expected, rising for a fifth consecutive month.  Also, the final versions of Markit PMIs for the Union suffered revisions, with the German index down to 56.4 from 56.6 previously estimated. The index for the EU remained unchanged at 53.7. In the US, Initial Jobless Claims for the week ended September 25, which printed at 837K, better than the 850K expected. Personal Spending was up 1.0% in August, beating expectations although Personal Income in the same month fell 2.7%. The core PCE inflation in the country was up to 1.6% from 1.4%, beating expectations. The official ISM Manufacturing PMI missed expectations in September, contracting to 55.4.

This Friday, the EU will publish the preliminary estimate of its September inflation, foreseen at -0.2% YoY. The US will publish the Nonfarm Payroll report. Expectations are that the country has added 850K new jobs in September, weaker than the previous month’s total of 1.37M. However, analysts are also expecting the unemployment rate to have ticked down to 8.2% from 8.4%.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair is trading between the 50% and the 61.8% retracement of its latest daily decline, maintaining a mildly positive stance. The 4-hour chart shows that the pair is above a bullish  20 SMA while the 100 SMA maintains its bearish slope around the mentioned daily high. Technical indicators, in the meantime, have seesawed within positive levels, lacking directional strength. The pair needs to break above 1.1770, the mentioned 61.8% retracement, to be able to extend its rally heading into the weekend.

Support levels: 1.1720 1.1670 1.1625

Resistance levels: 1.1770 1.1810 1.1850

View Live Chart for the EUR/USD

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