English
EUR/USD Investors Are Nearing The Crucial Resistance Level
EUR/USD buyers have returned to the market and are currently trading above 1.000. Monday will bring further pressure if the bears do not take action.
After ranging between 1.0966 and 1.1047 so far today, EUR/USD is currently trading around 0.1% higher and has rebounded against resistance. Nonfarm Payrolls data showed that US employers added more positions than anticipated in April, which boosted the US Dollar early Friday morning. Most importantly, wage growth exceeded expectations as well.
The Non-Farm Payrolls report revealed a gain of 253,00 positions, exceeding economists' expectations of a gain of 180,000. The average hourly wage in the United States increased at an annual rate of 4.4%, exceeding expectations of a 4.2% increase. However, data for March was revised downward to indicate 165,000 new jobs rather than the previously reported 236,000. This diminished the impact of the headline despite the fact that markets were already off-balance and needed to cover their US Dollar short positions, thereby exacerbating the decline in EUR/USD.
On Wall Street, the turnaround occurred when equities rallied and bulls returned. EUR/USD has maintained its position above the psychological 1.1000 level for the remainder of the trading session. Traders continue to anticipate that the Federal Reserve is at or near the conclusion of its tightening cycle, which is restraining the dollar.
''WIRP now implies approximately a 50% chance of a 50 bp hike at the March 21-22 FOMC meeting, down from over 70% pre-SVB,'' Brown Brothers Harriman analysts explained in relation to the banking crisis. It is anticipated that the Fed Funds rate will increase by 25 basis points in May and June, bringing the rate to 5.50-5.75 percent.
The analysts stated that the odds of a final 25 bp hike in Q3 have vanished compared to pre-SVB odds of over 30%. Today's employment report should refocus market attention on the US economy rather than the US banking system. We currently believe that the uptrends in US yields and the US dollar are intact.
In the meantime, analysts at Rabobank stated, ''given that further European Central Bank rate hikes are already priced in, there may be few reasons to purchase the EUR.''
''In our opinion, the EUR/USD pair may be approaching an apex. In the coming months, we anticipate a potential decline to the EUR/USD1.06 region,'' the analysts said.
Bonus rebate to help investors grow in the trading world!
