For growth to 1.2095 EURUSD, a positive external background is required

On Monday, May 3, trading in the EUR / USD pair ended with growth. The euro gained 0.39% against the US dollar to 1.2063. In the American session, the price rallied to 1.2076 from a low of 1.2013.

The US dollar fell against major currencies on the back of lower Treasury yields, as well as weak data on manufacturing activity in the US. The yield on 10-year US bonds fell to 1.582%.

In April, manufacturing activity in the US grew at a slower pace, falling short of market expectations. According to a report released by the Institute for Supply Management, the manufacturing index fell to 60.7% in April from 64.7% in March (the forecast was 65%).

If you look at the sub-indices of the ISM Manufacturing Index, the decline in two components is striking. The employment component fell to 55.1 from 59.6, and the new orders component fell to 64.3 from 68.0. On Friday, the NFP report may come out below the forecast of 988 thousand jobs.

Scheduled statistics (GMT + 3)

  • At 11:30 the UK is to publish the manufacturing PMI for April.
  • At 15:30, Canada will announce a change in the volume of building permits issued for March. The USA and Canada will present data on changes in the trade balance for March.
  • At 17:00 the US will announce a change in the volume of production orders for March.

Current situation

At the time of writing, the euro is worth 1.2041. The price bounced off the balance line (sma 55). Yesterday’s rise is a correction to Friday’s fall. It is very important for buyers now to prevent sellers from closing the hourly candle below 1.2025. While the price is trading above 1.2035, it is possible to see the formation of a three-wave correction of the model with the target of 1.2095 (67th gr., 1).

To rise to 1.2095, a positive external background and a decrease in Treasury yields are required. The yield value is 1.605%. Bonds are in a sideways trend after yesterday’s gains.

Above the level of 1.2040, resistances are at the levels 1.2059 (sma 55), 1.2067 (45 g., 2) and 1.2077 (trend line, 3). Economic calendar for euro is blank. Buyers are unlikely to pass the resistance zone without news. The ideal scenario is a fall to 1.2025, followed by a rebound to the trend line (3) at 1.2060.

Market participants focus on two US employment reports: ADP and Non-farm payrolls.

Summary: On Monday, buyers made an attempt to win back Friday’s losses, but met resistance in the 45 degree area and the balance line. The price recovery was supported by lower Treasury yields and the weakening of the US dollar.

In Asia, major currencies are trading in the red. The euro is in fifth place. Since the economic calendar is empty for the euro, there is a possibility of a decline to 1.2025 with a subsequent rebound at 1.2060.

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