We Expect Labor Statistics from the US

Since the beginning of this week, the greenback has been recovering its losses against a basket of world currencies after a significant drop. The dollar index (#DX) has updated local highs. The demand for risky assets has declined significantly. EU countries continue to publish weak economic releases. France has unveiled a large economic stimulus plan to fight the effects of the coronavirus. The ECB is concerned about the significant strengthening of the single currency against the US dollar. The Australian economy has entered a recession for the first time in 30 years.

finviz-dx-2020-09-03
Source: finviz.com

At the moment, investors have taken a wait-and-see attitude before the publication of US labor statistics for August, on Friday, September 04, at 15:30 (GMT+3:00). 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 accelerated from 54.2 to 56.0. The consumer confidence index counted to 84.8 compared to the previous value of 91.7. Data from ADP indicated that the number of people employed in the nonfarm sector of the country was 428K, which is below market expectations of 950K. ISM non-manufacturing PMI fell from 58,1 to 56,9.

non-farm-2020-09-03
Source: tradingeconomics.com

Experts expect a deterioration in key indicators: the number of people employed in the US nonfarm sector will slow down to 1.400K from 1.763K; the growth in average hourly earnings will be 4.5% (YoY) compared to the previous value of 4.8% (YoY). At the same time, the unemployment rate will drop to 9.8% from 10.2%. We recommend paying attention to the difference between the actual and forecasted values.

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

  • Support levels: 1.1800, 1.1700, 1.1620
  • Resistance levels: 1.1900, 1.2000
  • market-news-eurusd-2020-09-03

    The EUR/USD currency pair has become stable after a prolonged rally. The trading instrument is consolidating. At the moment, the following local support and resistance levels can be distinguished: 1.1800 and 1.1900, respectively. Indicators do not give accurate signals:

    • - The price has crossed the 50 MA and 100 MA;
    • - The MACD histogram has started declining.

    We recommend opening positions from key levels.

    If the report on the US labor market turns out to be optimistic, we expect a correction of EUR/USD quotes. The movement is tending to 1.1700-1.1600.

    An alternative could be a further growth of the EUR/USD currency pair to 1.2000-1.2100.

    When following positions, we recommend using a trailing stop.

    by JustForex, 2020.09.03

    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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