EURUSD: recovery to the 67th degree
On Friday the 9th of March, trading on the EURUSD pair closed slightly down. The key event of the day for currency markets was the US jobs report (Nonfarm payrolls). Before its release, the exchange rate was hovering around 1.2305.
313,000 new jobs were added outside the agricultural sector in the US in February against a forecast of 205,000. The figure for December was revised upwards from 160,000 to 175,000, and for January from 200,000 to 239,000. This brings the aggregate revision to +54,000. The unemployment level remained at 4.1% (forecast: 4.1%). Average earnings rose by 0.1%, missing its target of 0.2%.
The report shows reasonably high economic growth in the US. In reaction to this, the euro initially dropped to 1.2273 before recovering to 1.2334. By the time trading closed, the dollar had erased all its gains as traders paid close attention to the sluggish wage growth, which is an important factor for the Federal Reserve when deciding on interest rates.
The euro received an additional boost from reports that North Korean leader Kim Jong Un is willing to hold talks with US President Donald Trump. This created an appetite for risk.
Day’s news (GMT+3):
- 09:00 Japan: machine tool orders (Feb).
- 21:00 USA: monthly budget statement.
- Meeting of EU finance ministers.
The exchange rate recovered to the 45th degree from the 1.2273 low. This created an intraday reversal model.
Since today is Monday and the economic calendar is virtually empty, I think that after a small downwards correction, the pair will continue to the 67th degree at 1.2356. It’s worth noting that the major euro crosses, except for the EURJPY and EURAUD, are trading up and providing support to the euro bulls.
All this means that if the dollar continues to drop across the board, the euro could reach 1.2356 against it by the time trading gets underway in London. From here, I expect a downwards correction to 1.2318. Trading will look mostly flat today.