EUR/USD Extends Rally After Soft US Jobs Report Spurs Dovish Fed Expectations

EUR/USD commenced at 1.0728, marking a 1.02% increase following soft US jobs data on Friday. The Asian session remained relatively calm, with the currency pair trading within the range of 1.0722 to 1.0733. The ongoing trend for EUR/USD seems bullish, supported by the alignment of the 5, 10, and 21-day moving averages. Resistance levels are situated at 1.0764, marked by the 38.2% retracement level of the 1.1276 to 1.0448 move. Strong resistance can be found at 1.0805/10, where the 100 and 200-day moving averages converge. On the downside, support rests at the 55-day MA at 1.0653 and the 10-day MA at 1.0612. Buying on dips is considered a favored strategy as long as the 10-day moving average holds. The trajectory of US yields following last week’s sharp decline will be a key factor to watch.

EUR/USD began the New York session near 1.0650, continuing its rally from overnight gains. The rally persisted as the US October payroll and ISM non-manufacturing PMI reports indicated softening job and wage pressures. US yields experienced a decline, leading to a narrowing of German-US spreads. The US dollar faced selling pressure across the board, propelling EUR/USD to a 2.5-month high at 1.07465 on EBS. Contributing factors to the rally included drops in USD/CNH, oil prices, and gains in equities. Technical indicators favor a bullish outlook, with rising RSIs and the rally following an October monthly doji candle. The pair maintained most of its session gains, concluding with a 1.03% increase late in the day. It remains above the 55-DMA and daily cloud base, reinforcing the bullish signals. Key risk factors for the euro in the near term include German September industrial orders and Eurozone services PMIs.

In the upcoming week, market participants will closely monitor China’s October CPI, PPI, retail sales, and industrial output figures.

Key Levels to watch are 1.07708,1.08071,1.08850,1.06613,1.05576