EUR/USD Risks Ahead of NFP Volatility
Market Analysis: EUR/USD Outlook Amid Key Data Events
The EUR/USD has clawed back approximately 20 pips today to trade at 1.1754, driven by USD hesitation amid U.S. government shutdown concerns. However, rejection from a premium zone (1.175-1.177) and hotter-than-expected JOLTS data signal caution—this is not the time to chase the bounce. Traders should remain vigilant ahead of tomorrow’s high-impact Non-Farm Payrolls (NFP) release, which is likely to drive significant volatility.
Market Overview
Price Action & Technical Landscape
- Current Price: 1.1754 (as of Oct 2, 15:54 UTC)
- Daily Range: 1.1700 – 1.1780
- Short-Term Bias: Neutral with a slight bullish tilt.
- Long-Term Trend: Bearish, as the pair remains within a broader downtrend channel from Q1 highs in 2025.
EUR/USD has shown resilience today, recovering from its discount low (~1.164 on Oct 1) and breaking through minor bullish structures on the 1-hour chart. However, rejection from the bearish CHoCH line (~1.1755) and supply zone wicks suggest upside exhaustion. The pair remains capped by higher-timeframe resistance near 1.1800, which aligns with the broader bearish trend.
Key Technical Levels
- Support Zones:
- 1H Demand OB: 1.1700-1.1720 (28.4% volume confluence)
- Previous Day Low (PDL): ~1.1680
- Resistance Zones:
- 1H Supply OB: 1.1750-1.1770 (34.9% volume clustering)
- Pivot High (PVH): ~1.1775
- Daily Resistance: ~1.1800
Momentum Indicators
- RSI: Neutral at ~55, diverging bullishly from price.
- MACD: Momentum is flattening, signaling cooling upside pressure.
- Volume Profile: Low volume on the current rally suggests potential for a bull trap near resistance.
| Setup | Direction | Entry Trigger | Stop Loss | Take Profit 1/2 | Rationale & Prob. |
|---|---|---|---|---|---|
| OB Bounce (Base Case) | Long EUR/USD | Retest 1H green OB (1.172) + BOS hold | 1.1690 (below LL) | 1.177 (CHCH flip), trail to 1.183 | Premium rejection eases on weak NFP; aligns with seasonality. 55% prob. |
| Premium Rejection | Short EUR/USD | Wick/rejection at red 1H OB (1.176) + CHOCH confirm | 1.1790 (above PVH) | 1.172 (equil.), 1.168 (PDL) | Hot JOLTS + shutdown noise caps; X shorts building. 45% prob. |
| NFP Breakout Scalp | Long (if miss) | NFP <120K + close >1.177 | 1.1740 (post-news SL) | 1.185 (Fib ext.) | Soft print + Fed bets = BOS above CHCH. 50% prob. (news-dependent). |
| Range Fade (Neutral) | Short above 1.177 / Long below 1.172 | OB touch + vol spike | 20 pips opposite | 30 pips (equil. band) | Pre-NFP chop; low-vol rotation. 60% prob. |
Fundamental Update
Drivers of Recent Price Action
- Eurozone Data: Yesterday’s weaker-than-expected Eurozone CPI (YoY at 1.8% vs. 2.0% forecast) should have pressured the euro lower; however, USD weakness stemming from U.S. fiscal brinkmanship overshadowed this bearish signal.
- U.S. Labor Market Data: Today’s JOLTS job openings surprised to the upside (8.04M vs. 7.65M forecast), briefly boosting the USD before fading as markets refocused on broader risks like a potential government shutdown.
- Market Sentiment: Retail traders appear heavily short near the 1.175 resistance level, while inverse gold buys signal caution on USD strength.
Key Event Risk: Non-Farm Payrolls (NFP)
The NFP report, set to release tomorrow at 12:30 UTC, is the key pivot for EUR/USD this week:
- Forecast: +140K jobs added in September.
- Scenarios:
- A weaker-than-expected print (<120K) could fuel an EUR rally toward the 1.183 handle, as markets would increasingly price in Fed rate cuts (currently ~75bps by Q4).
- A stronger-than-expected print (>160K) risks a sharp drop toward 1.1585, especially if paired with a delay in U.S. fiscal resolution.
Technical Analysis: Rich Dad Indicator (1-Hour Chart)
Structure & Key Observations
The pair is navigating a multi-timeframe rotation:
- Lower Timeframe (LTF): The recent bullish break of structure (BOS) from the discount low (~1.164) pushed EUR/USD into a premium zone (~1.175-1.177). However, rejection at the bearish CHoCH line (~1.1755) indicates upside exhaustion.
- Higher Timeframe (HTF): Daily and weekly charts cap upside near ~1.1800, reinforcing the broader bearish trend.
Order Block (OB) Confluence
- Bullish OB (~1.170-1.172): This demand zone held convincingly yesterday, but low-volume buying suggests limited follow-through.
- Bearish OB (~1.175-1.177): This supply zone aligns with key resistance levels and has already triggered selling pressure, as evidenced by upper wicks.
Volatility Outlook
Expect heightened volatility tomorrow following the NFP release, with a likely intraday range of 1.1700-1.1800:
- Upside Risk: False breaks above 1.177 could spike to ~1.183 (61.8% Fib retracement).
- Downside Risk: A bearish flip below equilibrium (~1.172) targets the previous day’s low (~1.168).
Risk Management & Trading Strategy
Position Sizing
With NFP looming, prudent risk management is crucial:
- Risk no more than 0.5%-1% per setup, given potential for outsized volatility.
- Use tight stop-loss levels to protect capital.
Current Grid Analysis
Your current positions include:
- Net longs with an average entry of ~1.1849 (currently underwater due to premium dumps).
- Shorts with an average entry of ~1.1628 (cushioned by recent lower-low bounces).
Net performance today is +15 pips; however, another CHoCH flip could widen your drawdown to ~$3,200 USD.
Recommendations
- De-risk ahead of NFP:
- Trim half of your sell positions if price holds above the bullish OB (~1.170-1.172), signaling a potential pivot higher.
- Alternatively, close half of your buy positions on rejection near resistance (~1.1755) to manage downside exposure.
- Directional Setups:
- Long Setup: Enter near ~1.172 on bullish OB confirmation; target ~1.180 with stops below ~1.170.
- Short Setup: Enter near ~1.177 on rejection; target ~1.168 with stops above ~1.180.
Conclusion
EUR/USD remains in a precarious position ahead of tomorrow’s NFP release, with short-term bullish momentum facing stiff resistance at key levels (~1.175). Traders should focus on high-probability setups around order blocks while maintaining disciplined risk management practices to navigate potential volatility spikes effectively.