Past review of EUR/USD pair
The Euro continued to follow an upward development yesterday. As a result, the quote was firmly fixed at the levels of the spring of 2018.
What was published on the economic calendar?
Initially, Europe released quite good statistical data. The business activity index in the service sector declined from 46.9 points to 41.7 points, although it was only expected to decline to 45.1. Meanwhile, EU retail sales have grown significantly better than what was forecasted – 2.5% to 4.3%, given that the previous data were revised in favor of 2.2% ---> 2.5% growth.
The euro continued to strengthen after the publication of statistics.
During the American session, weekly data on applications for US unemployment benefits were published, where previous data were revised for the worse. But on the contrary, current indicators came out better than expected.
Number of initial applications for benefits declined by 75 thousand – from 787 thousand to 712 thousand, with a forecasted decline of only 3 thousand.
Volume of repeated applications for benefits declined immediately by 569 thousand – from 6, 089 thousand to 5, 520 thousand, with a forecasted decline of 156 thousand.
The US statistics were ignored by the market at the time of their publication, but reaction still came after a few hours.
What happened on the trading chart?
The quote was focused within the values of 1.3100/1.3130 at first, showing an attempt to pull back, but the Euro began to turn in favor of growth during the publication of statistical data on Europe. The highest price level (1.2174) was recorded at the beginning of the US session, where market participants found periodic resistance and a pullback, followed by the occurrence of sideways movement at 1.2132/1.2153.
Past review of GBP/USD pair
The pound showed high activity by more than 130 points yesterday, which led to an update of the 2020 high.
What was published on the economic calendar?
Britain's final data on the business activity index in the service sector was published, where the statistics came out slightly better than expected. The index declined from 51.4 points to 47.6 points, although it was expected to decline by 45.8.
The pound rose immediately after the publication of statistics. However, there is an assumption that it was growing on expectations of a trade deal on Brexit, and not on statistical indicators.
What happened on the trading chart?
From the very beginning of the trading day, the British currency was on an upward trend. This resulted in the breakdown of 1.3400, followed by an acceleration in the afternoon, which led us to update the high of 2020 – from 1.3482 ---> to 1.3498.
The level of 1.3498 eventually became a kind of resistance, where there was a local pullback of 65 points.
Trading recommendation for EUR/USD on December 4
Today's economic calendar includes the publication of an important report from the US Department of Labor in terms of financial markets. Based on the expectations of the report, a decline in the US unemployment rate from 6.9% to 6.8%, as well as an increase in employment outside agriculture by 469 thousand can be observed.
The recovery in the labor market positively affects the US dollar.
USA 13:30 Universal time - Report of the Department of Labor.
In terms of technical analysis, a temporary price stagnation can be seen after the recent pullback, where the quote fluctuates within the levels of 1.2132/1.2174. It can be assumed that the overbought European currency is considered an indisputable fact in the market due to the high rate of change in quotes recently.
Since this trading week started, the euro has risen by more than 240 points.
Based on the available data, it can be assumed that in case of a correction, where the price is consolidated below 1.2130, a path will open in the direction of values 1.2100-1.2040.
An alternative scenario of the market development will be considered if the price is maintained above 1.2175, which can locally push the rate to the resistance level of 1.2200.
Trading recommendation for GBP/USD on December 4
Considering the economic calendar, UK's data on the business activity index in the construction sector will be released today, where it is predicted to decline from 53.1 points to 52.0 points.
As before, the report of the US Department of Labor remains the main event. But which of these data will bring the main flow of traders?
From a technical viewpoint, it can be seen that the movement of the quotes during the Asian session looked like a consolidation with low activity, which signals an upcoming growth in the market.
If we assume that the pound, like the euro, is overbought due to the recent high rate of price growth, then there may be a correction in the market soon in the direction of the value of 1.3400-1.3350.
An alternative scenario of the market development will be considered if the price is maintained above the level of 1.3550 on the daily time frame.
