Forex Market: EUR/USD daily trading outlook

Yesterday’s trade saw EUR/USD within the range of 1.1068-1.1240. The pair closed at 1.1200, surging 0.86% on a daily basis. It has been the 13th gain in the past 24 trading days and also a fourth consecutive one. The daily high has been the highest level since October 22nd, when a high of 1.1352 was registered.

At 7:11 GMT today EUR/USD was inching down 0.01% for the day to trade at 1.1198. The pair touched a daily low at 1.1186 at 5:45 GMT, undershooting the daily S1 level, and a daily high at 1.1217 during the early phase of the Asian trading session.

On Friday EUR/USD trading may be influenced by the following macroeconomic reports as listed below.

Fundamentals

United States

Non-farm Payrolls, Average Hourly Earnings, Unemployment Rate

Employers in all sectors of economy in the United States, excluding the farming industry, probably added 190 000 new jobs in January, according to the median forecast by experts, after a job gain of 292 000 in December. The latter has been the highest job growth since December 2014, when 329 000 new job positions were added.

Employment in professional and business services rose by 73 000 in December, while for the full 2015 the sector added 605 000 job positions. Employment in the sector of construction increased for a third consecutive month in December, adding 45 000 jobs, while health care added 39 000 positions. Employment in food services and drinking places rose by 37 000 in December, while the sector of transportation and warehousing added 23 000 jobs. On the other hand, employment in US mining continue to decrease in December (-8 000 jobs), while for the full 2015 the sector lost 129 000 jobs, according to the report by the Bureau of Labor Statistics (BLS). Employment in other key industries such as wholesale trade, retail trade, financial activities and government remained little changed during the month.

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 January, demand for the US dollar would be strongly supported.

Average Hourly Earnings probably increased 0.3% in January compared to the prior month, according to market expectations, after remaining flat in December. If so, this would be the sharpest monthly increase in hourly earnings since October 2015.

The rate of unemployment in the country probably remained at 5.0% for a fourth consecutive month in January, 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 was almost unchanged at 7.9 million in December. The unemployment rate for adult men (4.7%), adult women (4.4%), teenagers (16.1%), whites (4.5%), Asians (4.0%), and Hispanics (6.3%) showed little or no change during the month, while the rate of unemployment for blacks decreased to 8.3%. The number of long-term unemployed (those looking for employment for 27 weeks or more) was almost unchanged at 2.1 million during October and comprised 26.3% of the unemployed, according to the BLS. In case the overall rate of unemployment met expectations or fell further, this would have a strong bullish effect on the US dollar.

The official employment data are due out at 13:30 GMT.

Balance of Trade

The deficit on US balance of trade probably widened to USD 43.0 billion in December, according to market expectations. In November the trade gap was reported at USD 42.4 billion, which has been the smallest since September 2015, when a deficit of USD 40.80 billion was registered.

Total exports decreased at a monthly rate of 0.9% in December to reach USD 182.2 billion. Exports of goods fell USD 1.4 billion to reach USD 122.2 billion in December. Exports of services went down USD 0.1 billion to USD 60.0 billion during the same month.

Total imports, at the same time, shrank at a monthly rate of 1.7% to reach USD 224.6 billion in December. Imports of goods were USD 3.7 billion lower to reach USD 183.5 billion, while imports of services fell USD 0.1 billion.

In case the gap on US trade balance widened more than anticipated in December, this would have a moderate bearish effect on the US dollar. The official report is to be released at 13:30 GMT.

Daily and Weekly Pivot Levels

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

R1 – 1.1216
R2 – 1.1232
R3 (range resistance) – 1.1247
R4 (range breakout) – 1.1295

S1 – 1.1184
S2 – 1.1168
S3 (range support) – 1.1153
S4 (range breakout) – 1.1105

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

Central Pivot Point – 1.0864
R1 – 1.0943
R2 – 1.1048
R3 – 1.1127

S1 – 1.0759
S2 – 1.0680
S3 – 1.0575