The EUR/USD currency pair continued its slow rally today, although it has been standing in the face of many headwinds that have kept a cap on its upward force. The duo touched an intraday high of 1.1778. It did, against all odds and extreme technical indicators and market reaction. The recent shutdown of the United States government has thrown that into doubt. This development is changing the overall market sentiment surrounding the currency pair.
In today’s trading, EURO/USD surged sharply higher after hitting recent lows, triggering bullish price action following the launch of the US ADP Employment Change report. This set up the surprise October report, which showed a shocking loss of 32,000 jobs in September. Consequently, the duo abruptly reversed course after making intraday lows around 1.1720. Within the headline employment figures, there was a big negative revision for August. Originally reported as a gain of 54,000, the data were later revised down to a loss of 3,000. This unexpected surge in employment stats has worried investors and traders alike, impacting the entire job market – Read the full story here.
Yet even with that movement, EUR/USD continues to struggle to get past technical hurdles. The pair has been challenged for the past three consecutive days as it flounders against a flat 20 Simple Moving Average (SMA). It is still pinned under a flat-lining 100 SMA. It is trading well above the 200 simple moving average (SMA) on the 4-hour. This chart today reflects a directionless abyss. The moving averages are converging, suggesting that the currency pair is consolidating. Now it’s attempting to set an even more obvious trend.
The United States’ most recent government shutdown, which began on Wednesday. So, this latest development has traders looking past the immediate dangers and towards a brightened economic outlook. This shutdown could still do more to affect job numbers and wider economic measures in the next weeks ahead. With a cloud of uncertainty hanging overhead, investors are bound to err on the side of caution, considering risks first before any possible paths to profit.
With EUR/USD trying to tread water amidst these headwinds, it has located modestly near-term demand layers that afford short-term buoyancy. The important support levels are located right at 1.1710, then 1.1685 and then at 1.1650. These levels can act as important psychological barriers for traders searching for patterns of continuation or reversal. Support continues to build at these levels, while resistance is proving stubborn at the 1.1780, 1.1830, and 1.1880 levels. In order to witness this upward movement, these resistance levels need to be cleared.
The 20 SMA is tilted slightly to the upside, indicating a potential accumulation of bullish momentum. To build on this momentum we should expect to see positive signals across the economic landscape. The outlook is bullish on EUR/USD in the long-term. This indicates that entrepreneurs may find new avenues for innovation as the marketplace evolves.