The dollar is holding its ground, despite a further flattening of the US yield curve. Bond traders seem to be concerned the Federal Reserve is going to push ahead with rate hikes next year despite the US economy having experienced one its longest expansions in 50 years – which would suggest it is on borrowed time.
But FX traders need to take a shorter term approach and for today that centres around the ADP employment number out of the US. This is usually a good guide to the new jobs number out on Friday. Heading into today’s data, analysts are expecting the Friday jobs-added number to come in around 190,000 with the unemployment rate steady at 4.1%. Average hourly earnings should bounce back from last month’s hurricane-related 2.4% year-on-year to 2.7%.
There would need to be a significant miss on these expectations to hold the FOMC back from raising its fed funds target rate range by 25 basis points to 1.25%-1.50% next Wednesday.
This is a relatively quiet week for data out of the eurozone.
Management and risk description
The euro has maintained its “impulsive” (bullish) Elliott Wave structure from its November 7 low of 1.1555 (refer daily chart below) to enable uptrend to extend towards the 1.2330 level over the coming weeks.
Yesterday saw the euro test key mathematical retracement support around the 1.1800 level, and with classical charting flag support about 1.1780 (refer daily chart) expecting 1.1800/1.1780 to now hold and rally above 1.1900/1.1920 resistance to herald the resumption of uptrend towards 1.2090 (this year’s September peak) en route to the late 1.2100s and 1.2330.
Entry: Today EURUSD is seen as a buy in the low 1.1800s.
Stop: Just under 1.1775, initially.
Target: 50% at 1.2083 and 50% at 1.2177.
Time horizon: Allow 1-2 weeks for first target to be met.
EURUSD daily chart (click to expand)
EURUSD weekly chart (click to expand)
Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more
— Edited by Susan McDonald
For more on forex, click here
Non-independent investment research disclaimer applies. Read more
A compiled overview of Trade Views provided on TradingFloor.com is found here