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Dollar surges across the board in early US session after solid non-farm payroll report that showed 11k job growth in Sep, best rate of growth in four months. More importantly, Aug's preliminary reading of -4k contraction was revised sharply higher to +89k, largely due to a revision in government employment. Average earnings growth accelerated slightly to 0.4%. Though, unemployment rate also edged higher from 4.6% to 4.7%. The report gives from room for the Fed to wait and see first and keep rates on hold later this month.
However, technically speaking, the outlook in dollar remains mixed. EUR/USD's medium term up trend is still in force. Meanwhile, a rising stock market could prompt yield hunt flows which could provide support to Aussie and Kiwi. The worst performer in will likely be the yen, including in crosses, in short term.
Earlier, Canadian dollar surges to new 31 year high against greenback, riding on a strong employment report which showed 51.1k job growth versus expectation of 15K in Sep. Unemployment rate also dropped from 6.0% to 5.9%.
EUR/USD
Daily Pivots: (S1) 1.4086; (P) 1.4118; (R1) 1.4169; More
EUR/USD's fall from 1.4281 resumes in early US session, reaching as low as 1.4031 so far. As long as 1.4148 resistance holds, further decline is still expected towards 1.3828/3926 support zone. But downside is still expected to be contained by 1.3828 cluster support (61.8% retracement of 1.3550 to 1.4281 at 1.3829, 50% retracement of 1.3360 to 1.4281 at 1.3821) and bring another rise. On the upside, above 1.4148 will indicate pull back from 1.4281 has completed and turn intraday bias back to the upside but firm break of 1.4281 high is needed to confirm recent rally has resumed. Otherwise, another fall could still be seen before completing the current consolidation.
In the bigger picture, medium term up trend from 1.1639 is still in force. Also, such rise is treated as resumption of the long term up trend from 0.8223 (00 low) to 1.3668 (04 high) and is expected to extend to 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004 which will overlap with 1.5 psychological resistance. However, EUR/USD will need to overcome next important cluster resistance zone at 1.4523 (261.8% projection of 1.3360 to 1.3719 from 1.3550 at 1.4490 and 200% projection of 1.3262 to 1.3851 from 1.3360 at 1.4538) first.
On the downside, sustained break of 1.3828 cluster support will indicate that rise from 1.3360 has likely completed and bring deeper decline. But still, the medium term up trend from 1.1639 remains in force as long as EUR/USD is supported by the medium term rising channel (support at 1.3500).
Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY, EUR/JPY) here.
Shing-Ip Tsui is the founder and CEO of www.ActionForex.com. ActionForex is set up with the aim to empower individual forex traders by providing insightful contents. Analysis reports, live pivot points on majors and crosses, etc are provided with collection of carefully selected educational articles and free trading ebook downloads.
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