Eurodollar Skyrockets as U.S. Employment Figures Fall Short of Expectations, Leading to Lower U.S. Interest Rates【November 6, 2023】

November 06, 2023

Markets Analysis

Fundamental Analysis

  • U.S. employment figures fall below market expectations, leading to a rise in stocks and a weaker dollar due to a decline in long-term U.S. interest rates.
  • Dollar straight currency pairs rise, while USD/JPY falls to the mid-149 yen range.
  • Eurodollar might be showing a change in the uptrend since July; attention is drawn to the upcoming resistance zones.

USDJPY Technical Analysis

Analyzing the daily chart of the Eurodollar rate. We notice higher lows forming and a recent large bullish candle that signifies a new high. The weakening dollar trend has been amplified due to the decline in interest rates associated with the contraction in the U.S. labor market. As a result, the Eurodollar has broken out of its range, targeting the 38.2% Fibonacci retracement level.

Simultaneously, the 24-day moving average (24MA) is acting as strong support and is perceived as a pivot point in the price. The Relative Strength Index (RSI) is on an upward trajectory, indicating a potential shift to the uptrend seen since the end of July.


Day Trading Strategy (Hourly)

Analyzing the 1-hour chart of the Eurodollar rate. Currently, the 24MA is providing support, but the RSI is at 71, signaling an overbought situation. It might be a good strategy to anticipate a pullback to the 24MA after the RSI drops below 70.

Ideally, aiming for a dip until the RSI nears 50, followed by a buying entry, would be preferable. At the moment, the market has a bullish sentiment, but one should be cautious entering at high levels.

Entry point should be set around USD 1.0665, with a target price at USD 1.0760 and a stop loss at USD 1.0635.

Support and Resistance Lines

The resistance line to be considered in the future is as follows

USD 1.076: Fibonacci retracement
USD 1.070: Round number


Market Sentiment

EURUSD Sell: 79% Buy: 21%

Today’s Important Economic Indicators

Economic Indicators and EventsJST (Japan Standard Time)
Summary of the Bank of Japan Monetary Policy Meeting8:50
EU Zone Service Sector Purchasing Managers’ Index18:00

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

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