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Past review of EUR/USD pair
Yesterday, the Euro kept the previously set upward rate, which made it possible to firmly consolidate above the key resistance level of 1.2000.
What was published on the economic calendar?
Initially, Europe's data on producer prices was released, where a decline to -2.4% was predicted, but the final data came at -2.0%, which is better than the forecast. Simultaneously with producer prices, data on the unemployment rate in the EU was also published, where they revised indicators for three months at once. Considering the new data, it turns out that the unemployment rate in the European Union is declining and currently stands at 8.4%
At the time the data was published, the Eurocurrency was stagnant, taking into account the fact that a significant correction was expected due to the expected negative statistics.
In the afternoon, the ADP published a report on US employment, where growth was expected by 410 thousand against the previous 365 thousand. However, these expectations were not met – employment increased, but only by 307 thousand.
The discrepancy in expectations negatively affected dollar positions, which resulted in the continuation of euro's growth.
What happened on the trading chart?
The quote was stagnant at first, followed by a pullback towards the level of 1.2040. However, after the US released their negative statistics, everyone quickly forgot about the overbought Euro. As a result, the euro continued to move along the upward trend, determining a new local high above 1.2100.
Past review of GBP/USD pair
The pound showed the highest activity yesterday, which led to a rapid decline of more than 150 points.
What was published on the economic calendar?
UK statistics were not published, but the US released the same ADP employment report, which turned out to be worse than expected.
Why did the pound sharply decline before the US released its data?
The pound immediately declined after Bloomberg reported that the Brexit deal was still in question and there was a risk that the UK would leave the EU without a trade agreement.
After the publication of this information, the pound began declining right away.
Market's reaction to such negative news was quite expected, as speculators are systematically using the Brexit background to their advantage.
In this case, we had the opportunity to easily earn about 100 points.
What happened on the trading chart?
At first, the quote stood in one place just above the level of 1.3400. But as soon as information on Brexit appeared, the pound rushed down towards the level of 1.3300, where the pivot point was found. The reversal coincided with the support level of 1.3300 and the release of US data, which turned out to be worse. In fact, we also had the opportunity to earn 50 points on the reversal.
Trading recommendation for EUR/USD on December 3
Taking into account the economic calendar, data on the business activity index in the service sector will be published, where its level is predicted to remain at 41.3 points. Nevertheless, the best results can be seen given all the recent revisions. This will be followed by the publication of retail sales data, where growth is predicted from 2.2% to 2.6-2.7%, which may positively affect the euro exchange rate.
EU 9:00 Universal time - Service PMI
EU 10:00 Universal time - Volume of retail sales
In the afternoon, the weekly data on US unemployment claims will be published, where further declines are predicted.
The number of initial applications for benefits may decline by 3 thousand – from 778 thousand to 775 thousand.
The volume of repeated applications for benefits may immediately decline by 156 thousand – from 6 071 thousand to 5 915 thousand.
The recovery in the labor market has a positive effect on the US dollar.
USA 13:30 Universal time - Claims for unemployment benefits
From a technical viewpoint, it can be seen that the price of the euro continues to strengthen and has already consolidated above 1.2100. Since this week started, the euro rose by more than 200 points, which could well affect the stability of buy positions, and develop the overbought status of the Euro.
If the inertial upward move is held in the market, moving towards the next resistance level of 1.2200 will be likely. It should be recalled that the overbought status can lead to the fixation of buy positions, in the form of correction.
Trading recommendation for GBP/USD on December 3
Today's economic calendar includes data on the UK business activity index in the service sector, where its level is expected to remain at 45.8 points. In the afternoon, the applications for US benefits will be published, which can support the dollar.
At the same time, any information on the Brexit process can re-activate speculators, thus we should follow the information flow and the plan given at the beginning of the article.
UK 9:30 Universal time - Index of business activity in the services sector for November
Technically, it can be seen that the quote rebounded from the level of 1.3300 and returned to the level of 1.3400, thereby confirming the limits of the previously broken sideways channel.
It can be assumed that the maximum deviation of the 1.3400 level, considering recent fluctuations, is coordinate 1.3435. A price rebound in the opposite direction is still possible, given the natural basis of the market.
An alternative scenario of market development will be considered if the price is kept above 1.3440 in the four-hour time frame, which may open the way to September 1st local high – 1.3482.
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