- The price of the euro currency pair against the US dollar EUR/USD has been moving along the same path as last week's closing trades since the start of trades this week.
- This is amid a downward path moving towards the 1.0669 support level which is the lowest for the currency pair for almost a month.
- It is settling around the 1.0720 support level at the time of writing the analysis.
- According to the trading in the markets, the American jobs numbers were stronger than all expectations.
This is a catalyst for the US dollar in achieving strong gains against the rest of the other major currencies without exception, because those numbers confirm that the US Federal Reserve Bank will continue to raise the US interest rate despite scaling back the amount of the increase in the last meeting.
Economic Outlook
The EUR/USD currency pair is traded affected by the results of the latest economic data, where the trade balance of American goods and services for the month of December exceeds the expected balance at -68.5 billion dollars with a balance of -67.4 billion dollars. The Redbook index for February registered a change (annual) of 4.3% compared to the 4.9% recorded in the previous reading. On the other hand, the IBD / ITTP Economic Optimism for the month recorded a reading of 45.1, up from the previous period of 42.3.
In the EU, seasonally adjusted and seasonally adjusted German industrial production for December exceeded the expected changes (year-on-year) and (monthly) by -0.2% and -0.6% respectively with a change of -3.9% and -3.1%. And EU retail sales for January missed both expectations (on an annual basis) and (monthly) at -2.7% and -2.5% respectively with a change of -2.8% and -2.7%. German factory orders for December exceeded estimates (monthly) of 2% with a change of 3.2%.
US Federal Reserve Chairman Jerome Powell said that if the US labor market strengthens in the coming months or inflation readings accelerate, the Fed may be forced to raise the benchmark interest rate higher than it now expects. Powell's comments followed a massive government report last week that employers added 517,000 jobs in January, roughly double December's gains. The unemployment rate in the country dropped to its lowest level in 53 years by 3.4%.
Powell added in statements to the Economic Club of Washington, "The reality is that if we continue to get strong labor market reports or higher inflation reports, it may be that we have to raise interest rates more" than is currently expected.
Technical analysis of the EUR/USD pair:
In the near term and according to the performance on the hourly chart, it seems that the EUR/USD currency pair is trading within the formation of a descending channel. This indicates a significant short-term bearish bias in market sentiment. Therefore, the bearish speculators will look to extend the current wave of declines towards the 1.0648 support or below to the 1.0599 support. On the other hand, the bulls will target the short-term profits at around 1.0755 or higher at the 1.0799 resistance.
In the long term and according to the performance on the daily chart, it seems that the EUR / USD currency pair has recently completed a downward breakout from the formation of an ascending channel. This indicates a sudden change in market sentiment from bullish to bearish. Therefore, the bearish speculators will target more bearish profits at around 1.0534 or lower at the 1.0368 support. On the other hand, the bulls will look to pounce on profits around the 1.0865 resistance or higher at the 1.1028 resistance.
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