The US dollar strengthened as traders reacted to mixed economic data from the United States. Data released yesterday showed that initial jobless claims dropped to 837k in the previous week. That was the lowest reading since March. Other data by Markit and ISM showed that the US manufacturing PMI was at 53.2 and 55.4, respectively. While the two numbers were worse than the analysts’ forecasts, they were above 50, which is a sign of expansion. Construction spending rose by 1.4% in August while the manufacturing index rose to 49.6. Also, data released yesterday showed that consumer spending rose in August even as incomes fell. Later today, the currency will react to the US nonfarm payrolls.

US futures declined as investors reacted to news that a close Trump aide, Hope Hicks, had tested positive for coronavirus. While the president did not test positive for the disease, he agreed to quarantine himself. The futures are also reacting to news that House Democrats had passed a $2.2 trillion stimulus deal. Still, without a commitment from the White House and Republicans, there is a significant likelihood that the bill won’t pass in the senate. The current negotiations have been watched closely by economists at the Federal Reserve, who worry the withdrawal of stimulus will stunt the US recovery.

Later today, we will receive the preliminary consumer price index data from the European Union. Analysts expect that the headline CPI dropped by 0.2% in September. The likelihood of deflation will put more pressure on the European Central Bank (ECB) to intervene. In the United States, we will receive the factory orders data and nonfarm payrolls. Analysts believe that the US economy added more than 850k jobs in September as the unemployment rate declined to 8.2%. Other key numbers expected today are the Norwegian unemployment rate, Japan household confidence, and Brazilian industrial production.

EUR/USD

The EUR/USD pair declined to an intraday low of 1.1718. The pair had reached a high of 1.1768. On the hourly chart, the pair seems to be forming a head and shoulders pattern. It has also moved below the 25-day exponential moving averages while the RSI has started to drop to 40. The H&S pattern is usually bearish, which means that the pair is likely to continue falling as bears attempt to move below 1.1700.

GBP/USD

The GBP/USD pair declined to an intraday low of 1.2860, which is lower than yesterday’s high of 1.2977. On the four-hour chart, the price moved to the 25-day exponential moving average. Also, it is along the 50% Fibonacci retracement level. It is also along the lower line of the ascending channel shown in green. The outlook for the pair is neutral but a move below the support of this channel will send a signal that sellers have prevailed, which will push the price lower.

USD/JPY

The USD/JPY pair rose slightly in overnight trading. It is trading at 105.61, which is slightly below yesterday’s high of 105.72. On the four-hour chart, the price is along the ascending channel that is shown in green. This channel signifies that the strength of the previous uptrend is waning. Also, the price is slightly above the 25-day exponential moving averages. Therefore, while the pair is likely to continue rising, there is a possibility that it will move below the support in the near term.