03 October 2024, EUR/USD
EURUSD:
On Wednesday, the EUR/USD exchange rate moved further into bearish territory as market uncertainty over the Middle East outlook and the fading prospect of a significant interest rate cut by the Federal Reserve (Fed) in November contributed to a general sense of market volatility.
This week's data releases are exclusively from the US, with European data limited to low-level speeches from European Central Bank (ECB) policymakers. The US Non-Farm Payrolls (NFP) data is scheduled for release on Friday, and investors are anticipating that the figures will have a significant impact on the US job market.
The US employment change data for September, released by ADP, exceeded expectations with 143,000 new jobs created. This figure surpassed the median forecast of 120,000 and the revised August figure of 103,000. Investors are now awaiting the official Non-Farm Payrolls (NFP) report, due for release on Friday, to confirm this preliminary data.
In a recent statement, Federal Reserve Chairman Jerome Powell advised against interpreting the 50 basis point rate cut in September as a harbinger of further aggressive rate adjustments. The Federal Reserve's Summary of Economic Projections (SEP) indicates that a 50 basis point rate cut is likely to be implemented at upcoming meetings. Market sentiment is aligned with the Fed's outlook, as evidenced by the CME's FedWatch tool, which indicates a 60% probability of a 25 basis point rate cut in November, with 40% of respondents anticipating a larger 50 basis point rate cut.
In addition to the focus on a Fed rate cut, the outlook for the US manufacturing sector remains uncertain due to the port workers' strike affecting goods movement along the East and Gulf Coasts. Escalating tensions in the Middle East caused by Iran's missile attack on Israel in response to Israeli actions in Lebanon are further adding to market volatility. Investors are closely monitoring the situation to assess Israel's response to the ongoing conflict.
Trade recommendation: Trading predominantly Sell orders from the current price level.
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