There’s Too Much Pressure On USD
By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets
There were enough statistics from the USA last Friday. The Unemployment Rate increased to 4.0% in January after being 3.9% the month before. However, the indicator wasn’t expected to change. The Average Hourly Earnings added only 0.1% m/m over the same period after expanding by 0.4% m/m in December. On YoY, the indicator was +3.2%.
The Non-Farm Employment Change was 304K in January after being 222K in the previous month and against the expected reading of 165K.
Perhaps, the USD would have paid attention to these numbers if it were not for the comments of Federal Reserve Bank of St. Louis President James Bullard, who said the U.S. no longer requires interest rate hikes. In his opinion, the current value of the federal funds rate was sufficient. At the same time, another representative of the US Federal Reserve told media that he was also in favor of pausing rate hikes.
This pressure may become a leverage over the Fed in the near future. In this light, the USD is facing a bigger potential downshift.
As we can see in the H1 chart, there was a divergence on MACD, which made EURUSD complete the ascending wave. Right now, the pair is trying to break the support line of the rising range and forming a descending channel. As for further descending movement, first of all one should pay attention to the retracement of 61.8% at 1.1376. Another thing worth mentioning is that the target is close to the support line of the projected channel. However, if the pair starts another ascending wave, the price may break the resistance line at 1.1488. In this case, the next upside target will be at 1.1577.
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.