Hello, dear colleagues!
Friday's data on the US labor market was very disappointing. Thus, unemployment in the United States jumped immediately to 4.4%, although growth expectations were reduced to 3.8%. Nonfarm Payroll figures for the month of March were shocking. Employment in non-agricultural sectors of the economy fell short in March of 701,000 new jobs, while it was expected that the loss will be only 100,000-150,000. As you can see, the difference is huge, and the figure itself minus 701,000 is simply shocking! If you compare these reports, they are much worse and do not go in any comparison with the reports on non-forms during the financial and economic crisis of 2008. The only bright spot in the main indicators of all American labor statistics was the growth of average hourly wages, which quite unexpectedly exceeded the forecast value of 0.2% and in fact amounted to 0.4%.
However, this did not affect the reaction of market participants. Traders' reaction to the extremely negative labor statistics from the United States was almost nonexistent. The market seemed to fall into a stupor and actually left without moving (that is, ignored) Friday's statistics from the US. It is clear that in the conditions of COVID-19 rampant around the world and the negative impact of the pandemic on the global economy, strong data on Nonfarm Payrolls were expected only by the most outspoken optimists. Nevertheless, such a faceless reaction of investors to the disgusting data on the change in the number of people employed outside the agricultural sectors of the American economy came as a surprise to me personally.
Now about the negative consequences of a new type of coronavirus. Many reputable global agencies and major commercial banks are voicing the numbers that the US, eurozone, UK and so on will miss. It also indicates the level of decline in the world economy, which will be around 2% by the end of this year. Well, it's their job to submit their forecasts to the court. At least now, when the peak of the epidemic has not yet passed. I believe that only after the peak of COVID-19 goes down and is passed, it will be possible to make some more accurate forecasts about the losses incurred.
Meanwhile, the predictions of some world leaders are not at all comforting. So, US President Donald Trump believes that 200,000 deaths from coronavirus in the US are a favorable scenario. Let me remind you that the coronavirus is currently affecting people in the United States at the fastest rate in the world, and the number of deaths is also increasing. The numbers are steadily increasing, so it doesn't make much sense to specify them.
In Europe, the situation is a little better, if at all. Spain and Italy are still the hotbeds of COVID-19. At the same time, the number of infected people in France and Germany increases significantly, with unenviable constancy.
But the Chinese, from whose territory the infection began to spread around the world, seem to have moved away and are now sending humanitarian aid to countries in need. China has started to open production facilities, only to whom to send finished products if the economy of its main trading partners is almost paralyzed. Everything is closed, everything is quarantined.
Most of this review was devoted to nonfarm and COVID-19, so we will briefly consider the technical picture of the main currency pair today.
Despite the fact that the last five-day trading closed at 1.0800, that is, above the level of 1.0777, which was once strong support, it is quite difficult to draw any definite conclusions.
It is safe to say that the US dollar does not take "neither hell nor the devil". The outbreak of the coronavirus epidemic in New York, Los Angeles, San Francisco, and the failed reports on the labor market for March did not have a negative impact on the US currency.
If investors remain in the same mood and have such faith in the US dollar, it is highly likely that the "American" will continue to be the favorite in the forex currency market.
As you can see, at the end of the article, the euro/dollar is trading flat. Growth attempts can limit moving averages: 50 MA (blue), 89 EMA (black), and 200 EMA (orange).
Conclusion and recommendations
The main trading idea for the EUR/USD pair remains sales, the nearest of which can be tried from 1.0833(50 MA). Above, you can look at the opening of short positions after the price rises to 1.0872, 1.0912 and 1.0938.
Have a good week!
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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