EUR / USD: it's All About the Labor Market
The EUR/USD pair drew another wave of sine waves on the chart: it fell by the same amount in the first week of August as it rose in the last week of July.
First, a review of last week’s events:
EUR/USD. Macroeconomic data continued to arrive last week, indicating a recovery in the US economy and labor market. Inflation figures released on Tuesday July 13 were well above forecasts. Τhe consumer price index increased by 0.9% ιn June, and by 5.4% and on an annualized basis, which is the highest growth rate since 2008. The core index, which excludes energy and food prices, has posted record growth since 1991, at 4.5% year on year.
First, a review of last week’s events:
EUR/USD. As predicted by the majority (65%) of experts, the dollar continued to weaken at the beginning of the week, and the EUR/USD pair went up. Disappointing data from the US labour market, released on July 02, affected the dollar. According to forecasts, the unemployment rate was supposed to fall from 5.8% to 5.7%, however, contrary to expectations, it rose to 5.9%.
First, a review of last week’s events:
EUR/USD. Making a forecast for the previous week, the majority of analysts (60%), supported by 85% of oscillators and trend indicators, voted for the strengthening of the dollar and the decline of the EUR/USD pair to the June 18 low of 1.1845. The forecast turned out to be absolutely correct, and the pair reached the set goal as early as Wednesday, June 30. But the dollar did not stop there and its DXY index renewed a three-month high on Friday, July 02, peaking at 92.699.
First, a review of last week’s events:
EUR/USD. The data on the labor market and the US economy released last week did not have much positive to please. Q1 GDP growth (6.4%) coincided with forecast data, which is no better but also no worse than market expectations. And then there were some disappointments. Initial jobless claims were 411K with a forecast of 380K. The increase in durable goods orders for May was lower than expected at 2.3% instead of 2.7%. And capital goods orders fell into the negative zone, minus 0.1%. And all this is against the back of Markit's business growth in Germany (60.4 in June versus 56.2 in May) and in the Eurozone as a whole (59.2 vs. 57.1).
First, a review of last week’s events:
EUR/USD. The US Federal Reserve meeting on Wednesday June 16 was the key event of the week. No particularly significant decisions were made there: the interest rate remained unchanged at 0.25%. The Federal Reserve will also continue to print money and buy back assets in the previous volume of $120 billion. But, as expected, following the meeting, the regulator's roadmap was unveiled, as a result of which the dollar bulls got what they had been waiting for.
First, a review of last week’s events:
EUR/USD. The key day last week was Thursday, June 10. There were two important events on the day: the European Central Bank meeting and the release of US consumer market data. Now let's talk about everything in order.
First, a review of last week’s events:
EUR/USD. When giving their forecast for the previous week, 50% of analysts expected the dollar to strengthen and the EUR/USD pair to fall to the 1.2000 area, 30% voted for the continuation of the sideways trend in the channel, 1.2125-1.2265, and another 20% supported the breakdown of the upper boundary of this channel.
First, a review of last week’s events:
EUR/USD. If you look at the chart of this pair on D1, it is safe to talk about the uptrend in the last eight weeks. But if you switch to lower timeframes, H4 or H1, it becomes clear that it has been in the "sideways" for the last two weeks, being squeezed in the range1.2125-1.2265. The last chord of the five-day period sounded in the area of the Pivot Point of this channel as well, at the level of 1.2194, without giving any guidance for the future.
First, a review of last week’s events:
EUR/USD. "Some Committee members would consider it appropriate to start discussing the topic of curtailing monetary stimulus if the US economy is moving quickly towards the targets set by the Fed," the minutes of the meeting of the Federal Open Market Committee (FOMC), which was published on Wednesday, May 19, say. The wording is more than vague. But it was against this background that the bears tried to strengthen the dollar and drop the EUR/USD pair down. As a result, having bounced off the high of the last eight weeks at 1.2245, it dropped by 85 points - to support1.2160.
First, a review of last week’s events:
EUR/USD. As predicted by most experts (60%), the first half of the week benefited the dollar, strengthening it and dropping the EUR/USD pair to support 1.2050. The US inflation report, released on Wednesday May 12, pointed to an impressive rise in April and hit the stock market hard. The consumer price index climbed 0.8%, the strongest monthly gain since 2009. In annual terms, inflation rose by 4.2% versus 2.6% between March 2020 and March 2021 and showed the strongest acceleration since 2008.
First, a review of last week’s events:
EUR/USD. There has been a lot of talk for a long time about how quickly and how well the US economy is recovering. But the head of the Fed, Jerome Powell, warned a week ago that everything is still quite fragile, and the acceleration of inflation is a temporary factor. Apparently, he already knew it then, and now everyone else knows it too: not everything is as rosy as it seemed.
First, a review of last week’s events:
EUR/USD. The last week of April was marked by three events: the Fed meeting, as well as the publication of data on the US and Eurozone GDP.
First, a review of last week’s events:
EUR/USD. The US economy is showing impressive growth. Europe, on the other hand, is in a widespread lockdown and, apparently, is experiencing a second recession. The share of those who received at least one COVID-19 vaccine in the EU is 25.1%, while in the United States there are 2.5 times more of them, 63.2%. Can the euro grow in such a situation? Only 25% of experts answered positively to this question last week, and they turned out to be right: the pairEUR / USD reached the level of 1.2080 on Tuesday, April 20.
First, a review of last week’s events:
EUR/USD. The past week was marked by two important economic events: impressively strong macro-statistics from the USA and a collapse in the yield of 10-year US government bonds.
First, a review of last week’s events:
EUR/USD. The U.S. economy continues to recover vigorously. The S&P500 index renews another high, the value of American Treasuries is growing and, accordingly, their yield is falling. And the dollar is falling along with it.
First, a review of last week’s events:
EUR/USD. The U.S. economy continues to recover vigorously. This is evidenced by the impressive data from the labor market. Thus, the number of new jobs created outside the agricultural sector (NFP) has almost doubled compared to the previous period (growth from 468K to 916K) and, moreover, has exceeded the forecast (647K) by almost a third. The ISM Manufacturing PMI has risen from 60.8 to 64.7. Also, according to the ADP report, the employment rate in the private sector has increased from 176K to 517K. All this suggests that fiscal stimulation of the economy and the injection of money into it is working. But is it good for the dollar?
First, a review of last week’s events:
EUR/USD. The dollar has periodically changed its status since the COVID-19 pandemic started, becoming either a safe haven currency or a risky asset for investors. For example, the US currency declined amid rising stock markets in November-December 2020. And since January, the dollar began to rise along with the S&P500. Now this index is in the area of its all-time high: 3.795. The DXY dollar index is also quoted in the area of annual highs: 92.72.
First, a review of last week’s events:
EUR/USD. It has become clear following the meeting of the Open Market Committee (FOMC) that the US Federal Reserve does not intend to raise interest rates until at least 2023. The Fed is not going to change other parameters of the quantitative easing (QE) program either, as long as inflation in the United States is growing, the manufacturing sector is recovering, and is pulling up the service sector. The bill signed by US President Joe Biden on a new $1.9 trillion package, according to the Fed, is quite a sufficient measure to stimulate the economy at this stage.
First, a review of last week’s events:
EUR/USD. Recall that the head of the Fed Jerome Powell literally brought down the American stock markets with his speech on February 4. Powell stayed indifferent to the surge in US Treasury yields, which closed at an annual high. At the same time, he hinted at the possibility of premature tightening of monetary policy.
First, a review of last week’s events:
EUR/USD. There is a saying, “a new broom sweeps clean”. If the previous US President Donald Trump were in the shoes of Joe Biden now, he would probably call the head of the Fed Jerome Powell a "traitor" for the fact that his speech on Thursday February 04 literally brought down the stock markets of America. Powell stayed indifferent to the surge in US Treasury yields, which closed at an annual high. At the same time, he hinted at the possibility of premature tightening of monetary policy.
First, a review of last week’s events:
EUR/USD. As we expected, the speech by the head of the Fed turned out to be quite interesting. Jerome Powell presented to Congress a semi-annual report on monetary policy, from which it followed that not everything is as good as we would like as far as the recovery of the US economy is concerned. The surge in economic activity in the summer of 2020 was followed by the slowsown of the growth rate. The decline in unemployment has slowed down, and household expenditures are not growing either.
First, a review of last week’s events:
EUR/USD. The sharp rise in bond yields in the US and Europe has hit not only the stock market, but also the “carry trade”, providing support to funding currencies, primarily the euro and the US dollar. Recall that the funding currency is usually a currency with a low interest rate. Implementing the carry trade strategy, traders borrow it and then deposit it in another currency, such as developing countries, with a higher rate. And now the fall in risk sentiment has led to an exit from such deals, and the strengthening of both EUR and USD. Apparently, this can explain the consolidation of this pair. And if the preponderance was on the side of the dollar in the first half of the week, then, investors began to buy up the cheaper euro starting from Wednesday, February 17. As a result, having started the week at the level of 1.2120, the EUR/USD pair ended it almost there, at the level of 1.2115;
First, a review of last week’s events:
EUR/USD. It often happens that monthly forecasts come true faster than weekly ones. That was what happened this time as well. Recall that only 30% of experts expected the EUR/USD pair to grow in the weekly perspective. In the transition to the monthly forecast, those were in majority already, 60%.
First, a review of last week’s events:
EUR/USD. The dollar has been growing throughout the week, fueled by optimism about the imminent recovery of the US economy. The incidence of coronavirus is down sharply: in just three weeks since the peak, the 7-day moving average has dropped by almost 50%. And a successful vaccination, complete with a new economic aid package, can generally lead to an economic boom in the country.
First, a review of last week’s events:
EUR/USD. The trade wars unleashed by the previous US President Trump have just seemingly subsided, but now we can "congratulate" everyone on the start of a new - currency - war. And it could prove equally exciting and unpredictable. This time, it was the European Central Bank, headed by Christine Lagarde, that declared hostilities. The adversary was, as you might guess, the US Federal Reserve System.
First, a review of last week’s events:
EUR/USD. We published a chart seven days ago that clearly showed how the correlation between the S&P500 index and EUR/USD was broken in early January. But now everything is back to normal: the S&P500 continued its growth, reaching a historic maximum of 3859.84 on January 21, and the EUR/USD pair went up with it, fully justifying the forecast of the majority (65%) of experts. Groping on Monday the local bottom at 1.2053, the euro then rose to 1.2190, the final chord sounded slightly lower, at 1.2170.
First, a review of last week’s events:
EUR/USD. Making a forecast for the past week, the majority of experts (60%) were in favor of reducing the pair first to support 1.2100, and then, possibly, another 50 points lower. Almost everything happened as forecasted: the EUR/USD pair was at the level of 1.2075 at the end of the trading week.
First, a review of last week’s events:
EUR/USD. The dollar has been falling, and the EUR/USD pair has been rising accordingly since the start of the COVID-19 pandemic last March. And now it is no longer far from its Q1 2018 highs. True, the result of the last three weeks can be considered zero. And the blame is not only the Christmas and New Year holidays, but also the growth in the yield of US Treasury bonds, coupled with the hawkish statements of the Fed representatives.
If someone asks which currency pair is the most important and most liquid on Forex, the answer will follow immediately. Even a beginner will say: “Of course, EUR/USD”. There is even nothing to doubt about this: the trading volume for this pair reaches $1.1 trillion per day. These currencies represent two of the world's most powerful economies, and the US dollar is the first most important reserve currency. Most central banks continue to store large volumes of their gold and foreign exchange reserves (over 60%) in US dollars. The euro comes in second with over 22%.
