After recovering from a two-week low, the EUR/USD has closed the day near the 1.2930 level, above the 1.2900, but below the psychological 1.3000 level. The cross accumulated around an 0.7% loss this week.
The mood seems negative in the EUR/USD, but Ashraf Laidi, Chief Global Strategist at City Index, commented on his Twitter account about a possible "Doji candle on the daily EURUSD chart," and he reminded that "Doji candles are bullish especially when formed at the end of a declining leg."
According to the last CFTC Commitment of Trader report, the EUR/USD net shorts rose slightly to 55K contracts in the week through October 23rd from 53K the previous week -- still near 52-week bullish extremes.
On the day, the euro fell to a two-week low of 1.2881 during the Friday's European session after Spain reported a record high unemployment rate of 25%, and amid lingering concerns about Greece. However, the pair managed to erase losses after news of progress on Spain's bank bailout offset pessimism.
In the short term, the technical picture still looks negative, with hourly indicators below their midlines, but correcting from oversold levels. Accelerations through the 1.2880 area could lead the pair toward 1.2850 en route to 1.2836, where the 200-day SMA should offer strong support. Loss of this latter would be a very bearish sign. On the upside, a regain of 1.3000 could provide relief.
According to the TD Securities team, the EUR/USD is consolidating and "underlying bias remains higher still, we feel." TD thinks that "key support in the 1.2800/70 region will underpin the EUR and providing it does, the price action essentially reflects a sideways consolidation range ahead of the next leg up."
The medium-term trends are "still EUR-bullish," comments TD Securities. "Key weekly resistance points are 1.3047 and 1.3126 (trend, top of a small bull triangle) on the weekly chart; a move above the latter would be very bullish, we think. Weekly support is 1.2830/40." TD still prefers "to look for opportunities to buy dips while 1.28 holds."
The Week Ahead:
As for the next week, investors should pay attention to Personal Income and Spending, Consumer Confidence, ISM Manufacturing, ADP Employment, and the employment report with its Non-Farm Payrolls in the United States. In Europe: CPIs, GDP in Spain, business and economic sentiments. GDP figures in Canada and the PMIs across the world, including the eurozone, U.S. and China.
The most important events next week are:
1. US Non-Farm Payrolls and October employment report in the U.S. (November 2)
2. PMIs in China, Eurozone, UK and the U.S.
3. October U.S. ISM Manufacturing PMI (November 1)
4. U.S. ADP Employment October Change (October 31)
5. Preliminary Consumer Price Index in Germany (October 29)
Finally, the FXstreet.com's currencies forecast poll has just been released, with its Experts, Banks & Brokers' targets:
EUR/USD: Experts' and banks' short-term euro estimates still look constructive.
GBP/USD: Sterling's outperformance against its rivals is seen in moderate expectation for the near term.
USD/JPY: Increased volatility in the yen shifts forecasts to 80.00.
USD/CHF: Swissie forecasts show negative sentiment one and three months ahead.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.