EURUSD Declines as Strong U.S. Economic Data is Weighed Down by Middle East Tensions【October 4, 2024】

Fundamental Analysis

• Strong U.S. economic data, but Middle East tensions weigh on stocks
• Bank of England Governor mentions rate cuts, linked to sharp drop in GBPUSD
• Today’s focus on U.S. Nonfarm Payrolls, watch out for increased volatility

EURUSD technical analysis

Analyzing the daily chart of EURUSD. EURUSD has formed a double top, dropping to around 1.10 USD yesterday. The support zone at the round number of 1.10 USD is solid, and the pair has rebounded. The 52-day moving average is just below, so if the pair breaks below 1.10 USD, this could signal further downside potential.

This is the second rebound from 1.10 USD, and the next drop will be the third attempt. Since third attempts often lead to breakthroughs, caution is needed. Depending on today’s U.S. Nonfarm Payrolls, a scenario where USD selling strengthens and a breakthrough occurs is also possible.

The ADX is approaching 30, indicating that the trend is gaining strength.

Day trading strategy (1 hour)

Analyzing the 1-hour chart of EURUSD. The pair rebounded after falling to around 1.10 USD. However, the rebound is quite weak. The economic situation in the Eurozone is deteriorating, and expectations of a significant ECB rate cut are rising. There is selling pressure on EURUSD.

There is a possibility that the pair could rise to around 1.1050 USD. Attention should be paid to whether the 23.6% Fibonacci retracement level is respected.

Since today is the U.S. Nonfarm Payrolls release, the outcome will dictate the market direction. If the data is weak, leading to USD selling, EURUSD could relatively rise. If the data exceeds expectations, leading to USD buying, EURUSD may drop sharply.

For day trading, while the long-term stance is to lean towards selling, it would be better to wait for the U.S. Nonfarm Payrolls results before taking any actions.

Support/Resistance lines

The following support and resistance levels should be considered going forward:

1.10 USD – Round number support

Market Sentiment

EURUSD – Sell: 22% / Buy: 78%

Today’s important economic indicators

*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.