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- Sideways Trade Looks Preferable for EURUSD
Sideways Trade Looks Preferable for EURUSD
The EUR/USD is still in the middle of its horizontal range, which has been shaped since mid-August. An upper border between 1.0910 and 1.0950 was repeatedly tested and now looks as a nearly invincible wall, even if this Friday's U.S. job report would surprisingly show some weakness. Its extra components including hourly earnings are unlikely to prompt the Federal Reserve (Fed) officials to change their minds, as the regulator feels necessary to maintain its borrowing costs at restrictive levels. This would mean at least a moderate Dollar strength for the mid-term on bets for maintaining a hawkish stance for an extended period. However, any non-farm payrolls indications below 150,000 may lead to an immediate jump of the single currency to this technical resistance area. At least a 50% chance of another interest rate hike by the end of the year will continue to keep the Dollar bulls in a good shape.
Any scenario with strong job numbers above 250,000, especially combined with fresh confirmations of uptrend in wages, may result in shifting the price by 50 or 70 points dipper than the current 1.0765 support to push the EUR/USD to 1.07. However, this would provide for a transition to some lower technical ranges rather than setting any clear market sentiment for further depreciation of the single currency, since the European Central Bank (ECB) is going to take steps to raise its interest rate soon as well, maintaining the rates differential at a comparable level.
Therefore, an intraday short trade for EUR/USD may be reasonable for another two or three hours after an extremely strong data release, should this occur, yet sideways trade looks preferable again when the dust settles and the first emotional reaction would be exhausted. Here I would bet on fundamental uncertainty, which would not allow more radical scenarios than just a moderate expansion of the available price range.
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