On Wednesday, Jerome Powell emphasized problems caused by inflation and the risks that the labor market may face. Notably, the US unemployment rate was at its lowest level in the last 50 years. However, a recent report unveiled that the unemployment rate jumped to 3.7% from 3.5%. According to the most pessimistic forecasts, the indicator should have increased to 3.6%. Most economists supposed that it would remain at the previous level. In other words, high inflation has started influencing the labor market, which is the main component of the US economic growth.
US Unemployment Rate
Today, the US dollar will hardly stop falling amid the absolutely empty macroeconomic calendar. The currency is unlikely to show a technical rebound. The US dollar will remain under significant pressure exerted by the US midterm elections. It is almost impossible to predict the outcome. If Republicans win the race, the White House may face difficulties in promoting this or that economic decision. Since the economic crisis is ballooning and the economy is tipping into a recession, the overall situation may deteriorate. The labor market will be damaged more than other sectors. Under the current economic conditions, which do not depend on the efficiency and reasonableness of the government's actions, the labor market will face negative consequences. Political conflicts usually overshadow other problems. Until the end of the elections, the greenback will remain under considerable pressure.
The pound/dollar pair skyrocketed, recouping all the previous losses. The speculative activity allowed the pair to return to the lower limit of the area of 1.1410/1.1525. On Friday, the pound sterling advanced by about 2%, which is almost 220 pips.
On the four-hour chart, the RSI technical indicator upwardly crossed line 50 amid such a jump in the pound sterling. This proves traders' deep interest in long positions. On the one-hour and 30-minute charts, the RSI entered the overbought area because of the price movement. Notably, at the beginning of the new trading week, the signal vanished.
On the four-hour chart, the Alligator's MAs are headed downwards. It is a remaining signal from the previous movement. In the short-term period, the indicator is pointing to an upward movement.
The new trading week began with a downward gap of about 70 pips. At the same time, the upward interest is still in force. That is why the price consolidation above 1.1410 may lead to a further rise in the volume of long positions.
The price has every chance to rebound until it trades below 1.1410.
In terms of the complex indicator analysis, we see that in the short-term and intraday periods, the indicator is providing sell signals because of the downward gap. In the mid-term period, we see buying opportunities thanks to the upward movement from the trend's low.