Investors Expect US Labor Market Data

The US dollar shows negative dynamics against a basket of world currencies. Over the past two weeks, the dollar index (#DX) has declined by more than 2.5%. Financial market participants are concerned about the spread of the COVID-19 virus and its negative impact on the global economy. The Fed urgently cut its key interest rate range by 50 basis points to 1.00%-1.25% two weeks before the scheduled policy meeting. The US dollar is under pressure due to prospects for further easing of the monetary policy by the Fed. Currently, futures point to a 50% chance that the Central Bank will cut interest rates by another 50 basis points by July.

dx-2020-03-05
Source: finviz.com

At the moment, investors have taken a wait-and-see attitude before the publication of labor statistics in the US for February, on Friday, March 6, at 15:30 (GMT+2:00). This report may have a significant impact on the dynamics and further alignment of forces on currency majors.

Recent economic releases from the US were ambiguous. ISM Manufacturing PMI fell from 50.9 to 50.1. Preliminary data from ADP indicated a decrease in the number of people employed in the country's nonfarm sector from 209K to 183K. At the same time, the indicator exceeded market expectations at the level of 170K. The consumer confidence index counted to 130.7 compared with the forecasted value of 132.0. ISM non-manufacturing PMI accelerated to 57.3 from 55.5.

non-farm-2020-03-05
Source: tradingeconomics.com

Experts expect mixed data on the labor market for February: the number of people employed in the US nonfarm sector will slow down from 225,000 to 175,000; the growth in average hourly earnings will be 0.3% (m/m) compared with the previous value of 0.2% (m/m); the unemployment rate will remain unchanged at 3.6%. We recommend paying attention to the difference between the actual and forecasted values of the indicators.

Let’s consider the current technical pattern on the EUR/USD currency pair

  • Support Levels: 1.1100, 1.1040, 1.0960
  • Resistance Levels: 1.1200, 1.1250
  • market-news-eurusd-2020-03-05

    At the moment, the EUR/USD currency pair has become stable after a significant rally since the end of February. There is no defined trend. The trading instrument is testing the key support and resistance levels: 1.1100 and 1.1200, respectively. Indicators signal the power of buyers:

    • - The price has fixed above 50 MA and 100 MA;
    • - The MACD histogram is in the positive zone.

    We recommend opening positions from key levels.

    If the report on the US labor market turns out to be weak, we expect further growth of EUR/USD quotes. The movement is tending to 1.1250-1.1300.

    An alternative may be the correction of the EUR/USD currency pair to 1.1050-1.0980.

    Confirmations and market entry points should be looked for on lower timeframes. When tracking positions, we recommend using a trailing stop.

    by JustForex, 2020.03.06

    This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

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