The main currency pair of the Forex market ended the first day of the new month in the same way as the June trading. However, in fairness, it should be noted that the decline yesterday was quite limited.
Time flies incredibly fast. It would seem that the trading week that has just started is already coming to its finish, and today the most important macroeconomic indicators of the current five-day period will be published. At 13:30 London time, reports on the US labor market will be released. Investors will focus on the unemployment rate, the number of new jobs created last month in non-agricultural sectors of the economy, and the average hourly wage. But this is not all, except for the official labor indicators, which are released every first Friday of every new month. Today there will still be releases on production orders and the US trade balance.
Nevertheless, let's get acquainted with the forecast versions of the most important indicators. So, according to the consensus forecast, it is expected that unemployment in June will be 5.7%, the number of newly created jobs will increase by 690-700 thousand, and the average hourly wage will grow by 0.4%. The forecast values are very impressive or significant.
In other words, expectations are high. However, I would like to note that the constant comments of Fed officials that the leading world economy is recovering from the effects of COVID-19 at a faster pace than previously expected are already partly embedded in the price of the US currency. Thus, for a significant strengthening of the US dollar, the indicators should come out much stronger than the forecast values, which are already high. Is it worth counting on this option? In my opinion, it is unlikely. The data may come out better than expected, but not so much that the US dollar will soar up against its main competitors. Most likely, the reaction of market participants will be very restrained. But if the forecasts do not come true and the actual figures turn out to be weaker, the "American" is waiting for serious problems. It is no secret that the reduction of the Fed's quantitative easing program will be associated primarily with the most important macroeconomic indicators that will indicate the degree of recovery and the overall state of the world's leading economy. In this regard, market participants will also consider today's labor reports through the prism of the timing of the beginning of the tightening of the Fed's monetary policy. As usual, data on the US labor market will be of the most significant importance and will certainly cause increased volatility in the foreign exchange market. How to trade the EUR/USD currency pair on such a day, and is it worth doing it at all?
Daily
Yesterday's trades were held in a relatively narrow trading range and were diverse. The pair both grew to 1.1885 and declined to 1.1838. As a result, Thursday's trading was closed at 1.1849, and the support level of 1.1845 again stood, although the profit was slightly punctured. Naturally, the course and results of today's and weekly trading will largely depend on the US data on the labor market. However, if we abstract from this, I will share one very interesting point with you, which is purely technical. We are talking about yesterday's candle with a long upper shadow and a small bearish body. This candle can be characterized as an "Inverted Hammer." However, it's not the name but the shape of the candle itself.
According to long-term observation, after such candles appear on the daily or weekly charts, the quotes most often follow an increase. If we also consider that the expectations for the main labor indicators are quite high, as well as the fact that the pair is near the support level of 1.1845, which it is still not possible to break through, you can take and buy EUR/USD. Naturally, it is better and more correct to decide on entering the market after data from the United States. At the same time, I do not rule out an initial decline to the area of 1.1810-1.1790, after which the pair will turn around and begin to show growth.
