EURUSD TECHS: Breaches Key Short-Term Support
- RES 4: 1.0327 High Aug 12
- RES 3: 1.0273 1.382 proj of the Sep 28 - Oct 4 - 13 price swing
- RES 2: 1.0198 High Sep 12 and a key resistance
- RES 1: 0.9976/1.0094 High Nov 2 / High Oct 27
- PRICE: 0.9765 @ 15:44 GMT Nov 03
- SUP 1: 0.9765 Trendline support drawn from the Sep 28 low
- SUP 2: 0.9705 Low Oct 21
- SUP 3: 0.9633 Low Oct 13
- SUP 4: 0.9536 Low Sep 28 and the bear trigger
EURUSD traded in a volatile manner across both the Wednesday and Thursday sessions, showing below and breaching the key area of support around 0.9812 (0.9821 yesterday). This marks the top of the bear channel that was breached last week. A clear break of this support would undermine the recent bullish outlook and signal scope for a deeper pullback. On the upside, a recovery and break of 0.9976, would be seen as a bullish development.
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EURGBP TECHS: Bounces Ahead of 50-Day EMA
- RES 4: 0.9388 High Mar 23 2020
- RES 3: 0.9292 High Sep 11 2020
- RES 2: 0.9066/9266 High Sep 28 / High Sep 26 and key resistance
- RES 1: 0.8850 High Sep 30
- PRICE: 0.8722 @ 15:21 BST Oct 4
- SUP 1: 0.8650/49 50-day EMA / Intraday low
- SUP 2: 0.8626 Low Sep 1
- SUP 3: 0.8559 76.4% retracement of the Aug 2 - Sep 26 rally
- SUP 4: 0.8522 Low Aug 30
EURGBP bounced ahead of a test of the 50-day EMA Tuesday, although he outlook remains negative for now. Monday’s extension lower put prices below the 20-day EMA and reinforces short-term bearish conditions. Attention is on the 50-day EMA that intersects at 0.8650 and represents a key near-term support. A clear break would signal scope for a deeper retracement. On the upside, initial firm resistance is seen at 0.8850, the Sep 30 high.
US: Job Market Slack Could Look Much Less "Unhealthy" By Early 2023
The August ratio of openings to unemployed (1.67) compares with 1.97 in July and the 1.99 peak in March, when the Fed started raising rates, and when Chair Powell remarked that the ratio marked an "unhealthy" job market.
- The one-month 0.3pp drop in the ratio is the biggest in the series history with the exceptions of March and April 2020. Whether the speed decline can continue is doubtful, but at this pace, the ratio would be back to pre-COVID levels (1.2) by October.
- Even declines at one-third of August's rate, by 0.1pp per month, would be enough to get the ratio closer to the 1.2 area by early 2023, and give the FOMC one less reason to tighten beyond what it's already signalled.
- The latest drop in the ratio wasn't without an increase in unemployment though, up 340k with the u/e rate up 0.2pts to 3.65% in August, but it still might be seen as a first step towards the Fed’s hope of being able to trim vacancies without unduly weighing on unemployment.
- The fact it’s only a first step is evidenced further by the private sector quits rate holding at 3.0%, down from highs of 3.3% but still notably higher than the 2.5% averaged in prior labour market peaks.
GBPUSD TECHS: Rally Extends
- RES 4: 1.1738 High Sep 13 and a key resistance
- RES 3: 1.1576 50-day EMA
- RES 2: 1.1461 High Sep 20
- RES 1: 1.1429 High Oct 4
- PRICE: 1.1410 @ 15:19 BST Oct 4
- SUP 1: 1.1025 Low Sep 30
- SUP 2: 1.0763 Low Sep 29
- SUP 3: 1.0541/0350 Low Sep 28 / All Time Low
- SUP 4: 1.0203 3.236 proj of the Jun 16 - Jul 14 - Aug 1 price swing
GBPUSD traded higher still Tuesday and started the week on a bullish note, extending the latest recovery from 1.0350, Sep 26 low. The pair has cleared resistance at the 20-day EMA and this signals scope for a continuation higher near-term. The climb has opened 1.1364, the Sep 22 high while further out, potential is seen for an extension towards the 50-day EMA at 1.1576 - a key resistance. Initial support is seen at 1.1025, the Sep 30 low.
