Forex Update: USD Remains the Favorite
By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets
Economic data from the U.S. last Friday were quite surprising for EURUSD. The labor market reports for February were rather mixed and confused market players a lot.
The Unemployment Rate in the U.S. fell from 4.0% in January to 3.8% last month. The indicator was expected to improve, but only by 0.1%. Average Hourly Earnings continued growing as the improvement was the best since 2009. However, the Non-Farm Employment Change scared investors quite a bit. The indicator was just 20K after being 311K (revised upwards) in the previous month, and this is why the major currency pair managed to recover a little bit after Thursday’s decline.
On one hand, it is extremely difficult for the labor market to constantly create so many jobs as it happened in December and January. From time to time, the labor market has to pause for stability. On the other hand, this component of the economy is still looking very stable and strong, and the weak February reading won’t change anything.
In our opinion, the Average Hourly Earnings reading is more important here. Employers continue to compete for labor by adjusting salaries. It’s a very positive development not only for the labor market, but for consumers and the entire economy as well.
The major currency pair is very cautious at the beginning of this week, but the USD seems to remain the market’s favorite despite last Friday’s decline.
Over several previous trading sessions, EURUSD not only managed to continue its descending tendency, but also updated its crucial low. As we can see in the H4 chart, after plummeting and testing the support line, the pair started a new correction to the upside. However, this pullback was no surprise due to the convergence on MACD. The next downside target is at 1.1130.
In the H1 chart, there was a convergence on Stochastic that confirmed a new ascending correction, which has already reached 23.6% fibo. The next upside correctional targets are at 1.1269, 1.1298, and 1.1327 (38.2%, 50.0%, and 61.8% fibo respectively).
Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.