Strong Statistics Failed To Support the USD

The numbers on the labor market published by the USA last Friday were mostly positive. The Non-Farm Employment Change showed 263K, which was better than market expectations of 181K. The Unemployment Rate went from 3.8% in March to 3.6% in April, although it wasn’t expected to change. The actual reading is the lowest over the last 49 years.

However, the Average Hourly Earnings in the USA added only 0.2% m/m against the expected reading of +0.3% m/m. This is what really attracted investors’ attention. In addition to that, they decided to focus on a minor indicator, the Participation Rate, which also got a little bit worse.

Most likely, it was just not a good day for the USD: investors were ignoring all positive reports and paid close attention to negative numbers. The same happened to the Services PMI from Markit and the ISM Non-Manufacturing PMI for April. The first indicator increased up to 53.0 points and went unnoticed, while the second one reduced to 55.5 points and put additional pressure on the American currency.

As we can see in the H4 chart, after breaking 1.1200 to the downside once again, EURUSD has returned to this level. Possibly, today the pair may form a narrow consolidation range below 1.1200. If the price breaks 1.1166 downwards, it may continue falling with the first target at 1.1085. However, this scenario may be canceled if the pair breaks 1.1200 upwards. An alternative scenario implies that the instrument may continue the correction towards 1.1244. From the technical point of view, this is confirmed by Stochastic Oscillator, as its signal line is moving above 50.00.

In the H1 chart, EURUSD has completed the correctional structure; right now, now it is consolidating at its top. In the short-term, the pair may start a new decline. After breaking 1.1166, the price may start a new wave to the downside towards 1.1085. From the technical point of view, this potential decline is confirmed by MACD Oscillator, as its signal line is moving below 0.00 and may continue falling. An alternative scenario suggests that 0.00 may be broken to the upside. In this case, the correction may continue to reach 1.1244.

By Dmitriy Gurkovskiy, Chief Analyst at RoboForex

Disclaimer

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.