EUR/USD – 4H.
As seen on the 4-hour chart, the EUR/USD pair performed a new reversal in favor of the EU currency and a new close above the correction level of 161.8% (1.0918), which allows traders to count on some growth of the pair in the direction of the upper area of the downward trend channel. At the same time, the consolidation of the euro/dollar pair under the correction level of 161.8% will again work in favor of the US currency and the resumption of the fall in the direction of the Fibo level of 200.0% (1.0802). No new emerging divergences are observed in any indicator today.
Yesterday, the only interesting report was on the change in the number of workers in the US from ADP. As it turned out after its release, the growth rate of this indicator is declining and this time the increase was 135,000. I don't think this is something critical for the US economy or specifically for the US labor market. Also, I do not think that this report can somehow affect Friday's Nonfarm Payrolls. It should be understood that the labor market in the United States cannot show greater increase each month than in the previous one. After all, in any case, a positive value (above 0) indicates the growth and expansion of the American labor market. Thus, traders may be upset only by a smaller increase than they expected. But again, it is worth understanding that the shortage of 5,000 workers within a multimillion-dollar country is nothing.
From my point of view, the labor market in America remains in excellent condition, and the last two cuts in the key rate were completely unrelated to either inflation or a slight decline in labor market indicators. America's inflation is a separate issue. A year or two ago, the Fed did not interfere with raising the key rate, while inflation, just as now, did not meet its expectations. Now, the Fed is persistently pretending that monetary policy is softening due to falling economic indicators, global risks, and weak inflation. Monetary policy is softening due to the policies of Donald Trump, who unleashed a trade war with China, and now the economies of many countries of the world require stimulation. It is because of this trade war that the world economy and, in particular, the US economy began to slide into recession.
Today, the indices of business activity in the services sectors of Germany, Spain, France, Italy and the European Union as a whole have already been released. All indicators, except the Italian one, showed another drop in indices. The European index of business activity in the service sector fell to 51.6, the composite index to 50.1. As we can see, business activity in Europe continues to decline not only in the manufacturing sector. Well, against the background of these reports, the euro may resume falling today, as there are no other options.
What to expect today from the euro/dollar currency pair?
On October 3, traders were already "impressed" by business activity in Europe, now it remains to wait for indices in America. AAs industry showed, the US is also experiencing a slowdown in business activity, therefore, we can expect weaker report values than predicted. In any case, the European currency has no reason to grow above the level of 127.2% (1.1024).
The Fibo grid is based on the extremes of May 23, 2019, and June 25, 2019.
Forecast for EUR/USD and trading recommendations:
I recommend selling the pair again today with the target of 1.0802 if a new close is made below the level of 1.0918. A stop-loss order above the level of 1.0927.
It will be possible to buy the pair after the close above the downward trend channel and above the correction level of 127.2% with the target of 1.1106.
