- A week before Fed officials meet to consider the appropriate pace of US interest rate cuts, three major reports are set to show underlying resilience in the US economy and a temporary slowdown in job growth.
- Ahead of these important and influential events, the EUR/USD price is holding below the psychological support level of 1.0800 with losses extending to the support level of 1.0782 at the time of writing, near the lowest level for the currency pair in more than three months.
According to the results of the economic calendar, the US employment report, due next Friday, is expected to show a modest increase of 110,000 jobs – about half the average increase this year of 200,000 jobs – and due to the blows inflicted on the Labor market by two hurricanes as well as the work stoppage at Boeing aircraft manufacturer. Furthermore, the unemployment rate in the country is expected to remain at 4.1%.
Economists expect Fed policymakers to discount these temporary factors and cut U.S. interest rates by a quarter-point at their Nov. 6-7 meeting. Meanwhile, officials are confident that price pressures are generally easing, a separate report is expected to show that the central bank’s preferred measure of core inflation accelerated at the end of September. The personal consumption expenditures price index, which excludes volatile food and energy costs, is expected to rise 0.3%, the highest in five months. Thursday’s report is also expected to show that consumer spending and personal income strengthened in September from the previous month, pointing to momentum in the broader economy.
On Wednesday, the U.S. government will also release its first estimate of third-quarter gross domestic product, with expectations for a solid 3% annual pace that would match the growth seen in the previous three months. In addition to strong consumer spending, GDP is likely to be supported by a surge in business spending on equipment.
Other reports this week include US job openings in September, third-quarter employment costs and consumer confidence in October. Also, the Institute for Supply Management will release its October manufacturing index.
Elsewhere, this week will provide the first glimpses of the hard data that the European Central Bank will use to tailor its next easing move in December, as investors increasingly price in a half-point rate cut. While signs of weakness are emerging, third-quarter GDP figures on Wednesday are expected to show the economy maintained a 0.2% growth pace, after a rebound in Spain and steady expansion in France and Italy offset a German recession.
Eurozone inflation is expected to accelerate slightly on Thursday to 1.9%, slightly below expectations.
The ECB’s 2% target is well above that target, with Germany well above it. Such results are in line with policymakers’ expectations of a tentative rebound before price growth stabilizes around the target in the first half of next year. The euro zone’s private sector downturn extended into a second month, with the region’s two largest economies weighing on output and showing little sign of recovery. Moreover, the International Monetary Fund said in an update to its World Economic Outlook released Tuesday that global output would expand by 3.2%, 0.1 percentage point slower than its July estimate. The IMF has warned for years that the global economy is likely to expand at its current modest pace over the medium term — too little to give countries the resources they need to reduce poverty and tackle climate change.
The global economy is heading into the end of the year with unexpected tailwinds, with slowing inflation setting the stage for an unexpected soft landing. Meanwhile, political hurdles lie ahead. The U.S. presidential election is looming, offering a very different economic outcome for the world. That comes on top of high government debt, escalating conflict in the Middle East, the grinding war between Russia and Ukraine and tensions in the Taiwan Strait.
According to stock trading platforms, Nasdaq rises on Friday, led by technology stocks. According to trading, the S&P 500 closed flat on Friday, the Dow Jones Industrial Average fell 259 points, while the Nasdaq 100 advanced 0.5% as declines in banks overshadowed gains in technology stocks. The financial sector was particularly affected by concerns surrounding New York Community Bancorp, which saw its shares fall 8.2% after disappointing guidance. Bank of America and Wells Fargo fell 1.7% and 1.3%, respectively, while Morgan Stanley and Goldman Sachs fell 2%. Conversely, shares of major technology companies such as Microsoft, Alphabet, Meta, and Amazon rose between 0.8% and 1.5% ahead of their upcoming earnings reports. In addition, Nvidia and TSMC American Depository Receipts rose 0.8% and 6.9% respectively, extending gains in the semiconductor sector. On the economic data front, the University of Michigan Consumer Survey indicated that both sentiment and expectations were revised higher, while inflation expectations were revised lower.
Over the week, the S&P 500 and Dow Jones fell 2.4% and 0.9%, while the Nasdaq posted slight gains.
Top Forex Brokers
EUR/USD Technical analysis and forecast:
Based on the daily chart, the overall trend for EUR/USD remains bearish and stability below the psychological support of 1.0800 confirms the dominance of the bears. I expect the performance to remain bearish until the reaction to economic data and important events from the US and Europe. The increasing strength of the dollar may push the currency pair to deeper bearish levels, the closest of which are currently 1.0720 and 1.0600 respectively, which in turn may push all technical indicators towards strong oversold levels. On the other hand, and in the same time frame, breaking the downtrend requires moving above the psychological level of 1.1000.
Ready to trade our daily EUR/USD Forex analysis? We’ve made a list of the best forex trading platforms for beginners worth trading with.