The week opens with the ISM Services PMI on Monday and closes with Canada’s jobs report on Friday, with the minutes of the Fed’s September meeting in between. The calendar is lighter than usual, yet each release tests the same question: does the US economy stay strong after last week’s solid labour market data? This issue covers US 30, EUR/USD, USD/JPY and USD/CAD.
Last week’s US data was strong. The labour market again confirmed the resilience of the economy, which lifted the dollar, supported Treasury yields and pushed traders to revisit their expectations for the pace of further Fed easing. Markets also kept following negotiations between the largest economies, which still shape appetite for risk.
Theme
Does US strength hold after last week’s jobs data?
Backdrop
A strong dollar, with US 30 and EUR/USD both under pressure.
Swing factor
The tone of the Fed, and how united its officials sound.
Setups
Four stop orders, risk to reward from 1:2.0 to 1:2.1.
Where the Market Stands Going Into the Week
The dollar enters the week in a strong position. US 30 has corrected from its July high above 54,000 to about 51,230 and sits near the lower Bollinger band. EUR/USD has fallen from the August area of 1.1710 to about 1.1250, close to key technical support, and USD/CAD has pushed to multi-month highs near 1.4260.
USD/JPY follows its own path. The pair has recovered from its September low near 153.00 and trades around 157.80. The ISM Services PMI and the FOMC minutes show whether the strength of the US economy holds, while Japan and Canada add their own data to the mix.
Key Events of the Week
| Date | Event | Instruments | Importance |
|---|---|---|---|
| Mon, Oct 5 | US ISM Services PMI | US 30, US 500, USD Index, US Treasuries | ●●● High |
| Mon, Oct 5 | Japan Consumer Confidence Index | USD/JPY, Nikkei 225, Japanese government bonds | ● Low |
| Tue, Oct 6 | Canada Ivey PMI | USD/CAD, Canadian dollar | ● Low |
| Wed, Oct 7 | FOMC Minutes | EUR/USD, USD Index, Gold, US Treasuries | ●●● High |
| Fri, Oct 9 | Canada Unemployment Rate | USD/CAD, Canadian dollar, Oil | ●● Medium |
| Fri, Oct 9 | US University of Michigan Consumer Sentiment, preliminary | USD Index, US 30, US Treasuries | ●● Medium |
ISM Services PMI, Forecast
55.0
Previous
55.4
Why It Matters
The services sector makes up almost 80% of the US economy, so the ISM Services PMI is one of the most closely watched leading indicators of business activity. Strong readings confirm that the economy is resilient and let the Fed keep a cautious approach to cutting rates. On Friday the preliminary University of Michigan consumer sentiment index follows, and together the two releases show the state of both business activity and domestic demand.
Market Reaction
A reading above 55.0 would support US 30, US 500 and the dollar, and keep Treasury yields firm. A weaker figure would widen expectations of further rate cuts from the Fed and weigh on the USD Index.
Market Sentiment
After the strong jobs data, we expect the US economy to confirm its resilience, and the consensus stays moderately positive. On the chart, US 30 trades around 51,230 after a long correction and tests support near the lower Bollinger band. MACD stays negative and below its signal line, so selling momentum has not clearly faded yet. The stochastic has left oversold and turns up, which raises the chance of a recovery move. A hold above 51,550 would confirm an upward correction toward 52,750. A loss of 50,980 support would widen the pressure from sellers.
Key Levels and Trade Parameters — US 30
Consumer Confidence, Forecast
34.0
Previous
35.5
Why It Matters
Consumer confidence shows how willing households are to spend, which makes it one of the key indicators of domestic demand. For the Bank of Japan, the index stays an important guide to how durable the economic recovery is.
Market Reaction
Weak data would strengthen expectations that the Bank of Japan keeps rates low. An unexpected improvement would support the yen and could weigh on USD/JPY.
Market Sentiment
We expect a small decline in the index and no sharp drop in sentiment. Strong data would support the yen and strengthen expectations of further policy normalisation by the Bank of Japan. On the chart, USD/JPY trades around 157.80 after a recovery from its September low near 153.00. Price stays above the middle Bollinger band, which keeps buyers in control for now. MACD has climbed back to the zero line and sits above its signal line, but it has not yet confirmed a full reversal. The stochastic has moved into the neutral area after leaving oversold, a sign that downward momentum is fading. A move below 156.20 would confirm the return of sellers with a target of 152.60. A hold above 158.00 would signal a deeper upward correction. The Sell Stop at 156.20 sits about 160 pips below the current price, so this setup needs a pullback first.
Key Levels and Trade Parameters — USD/JPY
| Parameter | Value |
|---|---|
| Resistance | 158.00 |
| Support | 156.20 / 152.60 |
| Entry, Sell Stop | 156.20 |
| Stop loss | 158.00 |
| Take profit | 152.60 |
| Risk to reward | 1:2.0 |
Meeting Covered
September
Key Themes
Why It Matters
The minutes show how united Federal Reserve officials are on the next move in interest rates. The market will focus on how they assess inflation risks, the labour market and the outlook for the economy. Any hint of a more cautious position can change expectations for monetary policy and trigger sharp moves in the currency market.
Market Reaction
Firmer language than expected would support the dollar and add pressure on EUR/USD. More cautious comments would weigh on the US currency. Gold and Treasury yields can react in the same session.
Market Sentiment
After the latest comments from Fed officials, we expect the tone to stay close to the previous meeting. We will look for any sign of a shift in the balance of opinion inside the Committee. On the chart, EUR/USD trades around 1.1250 after a long decline and sits near key technical support. Price is below the middle Bollinger line and close to the lower band. MACD stays negative and keeps confirming bearish momentum. The stochastic is in oversold, which raises the chance of short-term corrections but does not yet confirm a lasting reversal. A hold below 1.1210 would open the way toward 1.1100. A return above 1.1265 would be the first sign that downward pressure is easing.
Key Levels and Trade Parameters — EUR/USD
| Parameter | Value |
|---|---|
| Resistance | 1.1265 |
| Support | 1.1210 / 1.1100 |
| Entry, Sell Stop | 1.1210 |
| Stop loss | 1.1265 |
| Take profit | 1.1100 |
| Risk to reward | 1:2.0 |
Unemployment Rate, Forecast
6.5%
Previous
6.4%
Ivey PMI (Tue, Oct 6), Forecast
53.0
Previous
64.3
Why It Matters
The two releases give a broad picture of the Canadian economy. The Ivey PMI comes first, on Tuesday, and measures business activity at Canadian companies. The jobs report on Friday shows the state of the labour market. Data stronger than expected would lower the chance of further rate cuts by the Bank of Canada, which supports the Canadian dollar.
Market Reaction
Stronger figures would support CAD and push USD/CAD lower. Weak numbers would widen expectations of further rate cuts by the Bank of Canada and support a rise in the pair. Oil is the other market to watch for the Canadian dollar.
Market Sentiment
The consensus points to a moderate cooling of the economy. On the chart, USD/CAD trades around 1.4260 after a strong upward impulse and a new multi-month high. Price holds above the middle Bollinger line and approaches the upper band. MACD stays positive and keeps strengthening the bullish impulse. The stochastic is in overbought, which warns of a short-term correction but does not confirm a trend reversal. A hold above 1.4280 would confirm further growth toward 1.4420. A fall below 1.4210 would be the first sign of profit taking and a deeper pullback.
Key Levels and Trade Parameters — USD/CAD
| Parameter | Value |
|---|---|
| Resistance | 1.4280 / 1.4420 |
| Support | 1.4210 |
| Entry, Buy Stop | 1.4280 |
| Stop loss | 1.4210 |
| Take profit | 1.4420 |
| Risk to reward | 1:2.0 |
What Else to Watch
On Friday the University of Michigan publishes its preliminary consumer sentiment index for October. The index fell to 48.1 in September from 51.7 in August. It completes the picture after Monday’s ISM Services PMI by showing how households feel about spending, and a surprise there can move the dollar as well. No consensus figure for the October reading was available at the time of writing.
Track the forecast and the actual figures for each release, since the gap between consensus and the outcome is what tends to move prices the most. Learn more about how to read the economic calendar and trade the news.
Conclusion
The week tests how strong the US economy remains. A solid ISM Services PMI on Monday would help US 30 hold above 51,550 and aim for 52,750, while a weak figure keeps 50,980 in focus. The FOMC minutes on Wednesday then set the tone for the dollar: firmer language would push EUR/USD below 1.1210 toward 1.1100.
Japan’s consumer confidence gives USD/JPY a chance to pull back toward 156.20 and 152.60, and Friday’s Canadian data closes the week. Stronger figures would send USD/CAD lower from 1.4260, and a hold above 1.4280 would keep the road open to 1.4420.
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