Forex Market: EUR/USD daily trading forecast

Yesterday’s trade saw EUR/USD within the range of 1.0832-1.0898. The pair closed at 1.0883, going up 0.19% on a daily basis. It has been the first gain in the past four trading days. The daily low was a lower-low test of the low from Wednesday and also the lowest level since July 21st, when the cross registered a low of 1.0810.

At 7:17 GMT today EUR/USD was losing 0.11% for the day to trade at 1.0871. The pair touched a daily low at 1.0863 at 7:00 GMT, overshooting the range support level (S3).

Today EUR/USD trading may be influenced by the macroeconomic report listed below.

Fundamentals

United States

Non-farm Payrolls, Unemployment rate, Average Hourly Earnings

Employers in all sectors of economy in the United States, excluding the farming industry, probably added 180 000 new jobs in October, according to the median forecast by experts, after a job gain of 142 000 in September. The latter has been the lowest figure since March 2015, when 126 000 new jobs were added.

Employment in health care and social assistance increased by 34 000 jobs in September, while professional and business services sector added 31 000 jobs. Retail trade added 24 000 positions, while employment in food services and drinking places expanded by 21 000. On the other hand, employment in the mining industry continued to decrease in September (-10 000), while employment in sectors such as construction, manufacturing, wholesale trade, transportation and warehousing, financial activities and government remained almost unchanged during the month, according to the report by the Bureau of Labor Statistics (BLS).

The non-farm payrolls report presents the total number of US employees in any business, excluding the following four groups: farm employees, general government employees, employees of non-profit organizations, private household employees. The reading, released most often, varies between 10 000 and as much as 250 000 – 300 000 at times when economy is performing well. Despite the volatility and the possibility of large revisions, the non-farm payrolls indicator presents the most timely and comprehensive reflection of the current economic state. Total non-farm payrolls account for 80% of the workers, who produce the entire Gross Domestic Product of the United States. In case of a larger-than-expected gain in jobs in October, demand for the US dollar would be strongly supported.

Average Hourly Earnings probably increased 0.2% in October compared to the prior month, according to market expectations, after remaining flat in September.

The rate of unemployment in the country probably remained steady at 5.1% for a third consecutive month in September, according to expectations. It has been the lowest level since April 2008, when a rate of 5.0% was reported.

The total number of people unemployed shrank to 7.9 million in September from 8.0 million in August. The unemployment rate for adult men (4.7%), adult women (4.6%), teenagers (16.3%), whites (4.4%), blacks (9.2%), Asians (3.6%), and Hispanics (6.4%) showed little or no change during the month. The number of people unemployed for less than 5 weeks increased by 268 000 to 2.4 million in September, while the number of long-term unemployed (those looking for employment for 27 weeks or more) dropped to 2.1 million during the month from 2.2 million in August and comprised 26.6% of the unemployed, according to the BLS.

In case the unemployment rate met expectations or even fell further, this would have a strong bullish effect on the greenback, because of the positive implications for consumer spending. The Bureau of Labor Statistics will release the official employment data at 13:30 GMT.

Bond Yield Spread

The yield on German 2-year government bonds went as high as -0.303% on November 5th, or the highest level since November 3rd (-0.299%), after which it slid to -0.308% at the close to add 0.008 percentage point in comparison with November 4th. It has been the first gain in the past three trading days.

The yield on US 2-year government bonds climbed as high as 0.861% on November 5th, or the highest level in at least ten months, after which it closed at 0.834% to add 1.8 basis points (0.018 percentage point) compared to November 4th, while marking a fourth trading day of gains in a row.

The spread between 2-year US and 2-year German bond yields, which reflects the flow of funds in a short term, widened to 1.142% on November 5th from 1.132% on November 4th. The November 5th yield spread has been the largest one in at least six months.

Meanwhile, the yield on German 10-year government bonds soared as high as 0.621% on November 5th, or the highest level since October 21st (0.639%), after which it slid to 0.606% at the close to add 0.002 percentage point compared to November 4th, while marking a fourth straight trading day of increase.

The yield on US 10-year government bonds climbed as high as 2.263% on November 5th, or the highest level since September 17th (2.298%), after which it slipped to 2.236% at the close to add 0.009 percentage point compared to November 4th, while marking a fourth consecutive trading day of gains.

The spread between 10-year US and 10-year German bond yields widened to 1.630% on November 5th from 1.623% on November 4th. The November 5th yield difference has been the largest one since November 3rd, when the spread was 1.643%.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for EUR/USD are presented as follows:

R1 – 1.0889
R2 – 1.0895
R3 (range resistance) – 1.0901
R4 (range breakout) – 1.0919

S1 – 1.0877
S2 – 1.0871
S3 (range support) – 1.0865
S4 (range breakout) – 1.0847

By using the traditional method of calculation, the weekly pivot levels for EUR/USD are presented as follows:

Central Pivot Point – 1.0998
R1 – 1.1103
R2 – 1.1200
R3 – 1.1305

S1 – 1.0901
S2 – 1.0796
S3 – 1.0699