The EURUSD is turning lower on dollar strength. The September US Non-farm Payrolls report failed to meet expectations, as the US economy failed to create the 850,000 jobs that economist anticipated. However, investors tend to ignore the data when it is the government that hires or fires, and indeed this month it was the government sector that generated the shortfall, as 216K government jobs were lost. The private sector remains strong.
Also, the US unemployment rate declined to 7.9% vs 8.2% anticipated, and since May, the unemployment rate has been beating expectations. The combination of a decent NFP report is putting pressure on the EURUSD, and as I noted earlier in the week, I think the EURUSD is on track to reach 1.15. Investors are likely to remain positioned for a weaker Euro and stronger dollar as long as the price trades below the 1.1776 level.
Also, the fact that President Trump has now attracted Covid-19, is likely to support the dollar further as it gives Joe Biden a small advantage at the election, and with Mr Biden in the helm, I think the US could drop its anti-dollar policy.
From a technical point of view, the EURUSD triggered a bearish head and shoulders pattern on September 21. This pattern has a target of 1.15, and the price did indeed turn lower as the pattern projected, however, over the last couple of days, the price has traded against this view, but not enough to trade above 1.1776 and invalidate this pattern.
I am, therefore, still bearish and anticipate the EURUSD to trade to 1.16, followed by 1.15 in the weeks ahead. On the price trading above 1.1776, I will turn neutral on the pair, but we could have a short-squeeze lifting the price to 1.1850.
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