Fundamental Analysis:

The dollar turned lower against the other major currencies on Friday after a weaker than expected U.S jobs report for September dampened expectations for a rate hike by the Federal Reserve this year.

The Labor Department reported that the U.S. economy added just 142,000 jobs last month, well below expectations of the 203,000 expected by economists.

August’s reading was revised down to 135,000, from the initial reported figure of 173,000.

Average hourly earnings were flat month-on-month and the labor force participation rate fell to just 62.4%, down from 62.6% in August. The unemployment rate was unchanged at 5.1%, in line with forecasts.

The report underlined fears that a slowdown in global economic growth has spread to the U.S. economy and prompted investors to push back expectations on the timing of an initial rate hike by the Federal Reserve to early 2016.

Higher U.S. interest rates would boost the dollar, making the currency more attractive to yield seeking investors.


Technical Analysis:

EUR/USD recovered strongly last week but faced resistance from near term falling trend line on the 4 hours chart and retreated. Outlook is unchanged and initial bias remains neutral first. Risk remains on the downside with 1.1459 resistance intact. Below 1.1104 will resume the fall from 1.1713 and target 1.0807 support next. Note that whole corrective rise from 1.0461 has completed at 1.1713, ahead of 38.2% retracement of 1.3993 to 1.0461 at 1.1810. Break of 1.0807 would pave the way back to 1.0461. However, break of 1.1459 resistance will bring another rise through 1.1713 resistance instead.


In the week ahead, investors will be focusing on Wednesday’s minutes of the Fed’s September meeting, when the central bank decided to delay hiking rates.

Leave a Reply

Your email address will not be published. Required fields are marked *