The Dollar Slowed Down Its Attack

The statistics from the USA published last Friday turned out to be more positive than everyone could have expected. The Unemployment Rate went from 3.9% in April to 3.8% in May, although it wasn’t expected to change at all. The actual reading is the strongest over the last 18 years, which is surely good for the American economy and currency. The Non-Farm Employment Change expanded up to 223K in May against the expected reading of 188K. By the way, the April number was revised downwards.

The Average Hourly Earnings (from time to time, this indicator becomes a more important factor for investors in buying or selling the USD) added 0.3% m/m in May, the same as expected.

However, the American currency didn’t get proper support from such strong numbers. In this light, investors are getting more worried about possible moves from the US Federal Reserve relating to the benchmark rate increase (it seems quite strange because earlier they were “dreaming” about the Fed’s being more determined in this matter). The next meeting of the regulator will take place in June and market expectations are pretty positive: investors are sure that the key rate will be increased during this meeting. Apart from this, in the meeting minutes, which will be published later, investors will look for any hints at the fourth increase in the rate this year.

Investors’ concerns, which influenced the Euro currency so much last week, are starting to fade away little by little. The political turmoil drama in Italy is dying down – it seems that there will be new elections, but not earlier than in September, which is quite far away from now. Another driver, the Spanish factor involving the corruption scandal, no longer remains a live issue of the day. All these things taken together gave EURUSD a short break.

From the technical point of view, EURUSD stopped falling steadily and right now is testing the resistance line of the mid-term descending channel. However, this is just an attempt to reverse the previous tendency. If the price fixes above the resistance line, which is becoming the support level, it will be the first step in forming a new uptrend. Reaching 1.1860, which is located on the projected resistance line, will confirm the tendency reverse. The main support level for the current ascending channel is at 1.1650.

This article was written by Dmitriy Gurkovskiy, a Chief Analyst at RoboForex