The euro strengthened against the U.S. dollar on Thursday, extending its advance above 1.1750 during early European hours. Political gridlock in Washington and weak labor signals weighed on the dollar, giving the common currency additional momentum.
Technical indicators point to further upside potential:
- 100-period SMA (4H chart): pivot level at 1.1750
- Next resistance: 1.1770 (23.6% Fibonacci retracement)
- Upside targets: 1.1820 and 1.1900
- Support levels: 1.1710–1.1700 (200-SMA, 38.2% retracement), then 1.1640
Analysts note that a confirmed break above 1.1770 could attract technical buyers, with the next ceiling seen near the 1.1820 region.
U.S. Data Delays Pressure the Dollar
The greenback struggled to mount a rebound as the U.S. government shutdown stalled official economic releases. Key data points such as weekly jobless claims and factory orders were postponed, leaving markets with fewer signals to gauge labor market health.
In the absence of government reports, investors focused on private surveys:
- ADP payrolls (Sept): –32,000 jobs, sharp miss vs. +50,000 forecast
- August revision: cut from +54,000 to –3,000
- ISM Manufacturing PMI: 49.1, still in contraction despite a slight uptick from August’s 48.7
- Prices Paid Index: 61.9, down from 63.7
- Employment Index: improved modestly to 45.3 from 43.8
The Challenger Job Cuts report, due later in the day, is expected to gain outsized attention. While not typically a market mover, the lack of competing releases could heighten its impact on sentiment, especially if layoffs rise sharply.
Political Uncertainty Shapes Market Outlook
The standoff in Washington remains a critical variable. Lawmakers failed to agree on a funding bill Wednesday, extending the shutdown and fueling market unease. The impasse not only threatens short-term economic activity but also undermines confidence in the dollar’s near-term trajectory.
- Shutdown impact: suspension of labor and census reports
- Market sentiment: weaker data likely to support EUR/USD gains
- Rebound risk: a breakthrough in funding talks could strengthen the dollar
For now, traders see limited upside for the dollar unless political developments signal a clear path out of the deadlock. In contrast, the euro continues to benefit from its role as a relative safe-haven play against U.S. political risk.