The US dollar strengthened its position against the euro on Friday afternoon after a strong report on employment and wages, which increased investors' expectations that the Federal Reserve will raise rates in December of this year, and also continue their gradual increase next year.

Basic data

According to the US Department of Labor, the number of non-agricultural jobs in October 2018 increased by 250,000. Unemployment remained unchanged, at 3.7%. A rise in average hourly earnings of 3.1% will also stimulate households to increase their spending, which will lead to support for the economy. Economists had expected that the number of jobs in October rose by 188,000, while unemployment remained at 3.7%.

The average hourly earnings amounted to 27.30 dollars.

A good report on production orders also appealed to traders and investors who are betting on the strengthening of the American dollar. According to the Ministry of Commerce, industrial orders in the United States in September this year increased by 0.7% compared with August and amounted to 515.33 billion dollars. Economists had expected growth in orders to be 0.5%. Excluding transport, production orders rose by 0.4%. New orders for durable goods in September rose by 0.7% compared with August.

Despite all the efforts of the White House administration and Donald Trump, the US trade deficit continues to grow. According to the report, in September, the deficit increased due to an increase in imports of capital and consumer goods.

According to the US Department of Commerce, the deficit in foreign trade in goods and services in September of this year increased by 1.3% compared with the previous month and amounted to $ 54.02 billion, while economists had expected the deficit to be $ 53.8 billion.

Imports increased by 1.5%.

Pressure on the European currency on Friday afternoon caused rumors and talk that the European Central Bank is considering the possibility of introducing a new long-term lending program LTRO, which will be aimed at supporting European banks. This program can replace the current asset repurchase program, which is likely to end in December of this year.

The introduction of this program is required in order to secure first of all the Italian banks and prevent the growth of public debt with an increase in the budget deficit. Also, a number of other European banks will not refuse from this type of assistance.

If the program is accepted, this may weaken the position of the European currency on the world stage in the medium term, since one QE program will be replaced, in fact, with a similar program of financial assistance LTRO.

As for the technical picture of the EUR / USD pair, much will depend on whether the buyers of risky assets will be able to return to the market in the near future. To do this, they need to consolidate above the important resistance level in the range of 1.1410-1.1420, which will lead to the alignment of a new upward wave with the update of the highs of 1.1460 and 1.1520. If the euro remains below the resistance of 1.1410 in the near future, the breakthrough of support for 1.1380 will be a direct signal to open short positions in risky assets with a likely update of the minimums of 1.1340 and 1.1300.