• NFP report may shake the markets as EURUSD battles with 1.0800
• BoJ interest rate may remain steady; USDJPY rises to 3-month high
• Eurozone flash CPI may fail to help EURGBP to recover

US NFP report --> EURUSD

This week’s US data will provide an update on the US economy and inflation ahead of the Fed's November policy decision.

The October nonfarm payrolls report will be the highlight of the week. After a strong 254k gain in September, the US economy is expected to add 115k jobs in October, indicating a deceleration. However, the unemployment rate is predicted to remain unchanged at 4.1% and average hourly earnings growth will fall from 0.4% to 0.3% m/m.

Headline PCE fell to 2.2% in August and is  forecast of to decline again to 2.1% in September, while core PCE is expected to tick down to 2.6% from 2.7% y/y before. Thus, the inflation numbers may not aid the Fed or investors much.

EURUSD is currently facing resistance at the key level of 1.0800, which is situated within the medium- and long-term ascending trend lines. A successful break above these levels could provide some optimism for a pause in the downside move, potentially reaching the flat 200-day simple moving average (SMA) at 1.0810. Even higher, the 1.0950 resistance is coming next. Otherwise, a plunge beneath the 1.0775 support could open the way for a test of the 1.0665 barrier.

BoJ policy meeting --> USDJPY

At Thursday's policy meeting, the BoJ is anticipated to hold short-term rates at 0.25% but pledge to raise borrowing costs if Japan meets its 2% inflation target. The latest outlook report with new inflation and growth predictions should shed light on the chances of a rate hike in December or early 2025. Without signs of a rate hike, the yen will likely struggle versus the US dollar. Investors may disregard the danger that a weaker yen may encourage policymakers to raise rates sooner rather than later.

USDJPY jumped to a new three-month high of 153.90 on Monday but is struggling to have a closing session beyond the 61.8% Fibonacci retracement level of the down leg from 161.94 to 139.56 at 153.40. If the rally continues, then the price could meet the next resistance level at 155.20. On the other hand, a decline beneath the 200-day SMA could find support at the 50.0% Fibonacci of 150.75. The Stochastics and RSI are standing near overbought levels. 

Eurozone flash CPI --> EURGBP 

On Thursday, the focus will shift to the Eurozone’s preliminary CPI figure. The headline rate is expected to increase from 1.7% to 1.9% y/y in October, while the ECB anticipates an acceleration in the forthcoming months. If the numbers miss expectations, investors will likely increase their bets for a 50-basis point reduction by the ECB in December.

EURGBP is still developing in a descending tendency, finding strong resistance at the 20-day SMA, which overlaps with the 0.8350 resistance level and the downtrend line. Steeper decreases could open the way to the two-and-a-half-year low of 0.8295, while even lower, the April 2022 trough of 0.8250 may halt bearish actions. Alternatively, a rise above the 0.8350 barrier could lead to the 50-day SMA at 0.8380. The broader outlook remains negative.