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The dollar maintained an advantage on Friday, but it quickly gave it back during today's Asian trading.
Nonfarm payrolls in the US came in below economists' forecasts, offset by a drop in the US unemployment rate to 4.4%. This paradox — a slowdown in job creation alongside a falling unemployment rate — sparked heated discussion. Some believe this is a temporary phenomenon caused by statistical errors and data-collection specifics. Others see signs of bigger structural changes in the US economy. As noted above, the FX market's reaction to these data was ambiguous. The initial dollar rise triggered by the lower unemployment rate soon gave way to stabilization, then a decline, which continued during the Asian session. Traders realized that slower employment growth will negatively affect US GDP growth and, consequently, the Federal Reserve's rate outlook.
Today, the only eurozone report expected is the Sentix investor confidence indicator. This measure is a barometer of financial-market sentiment and can provide insight into the region's growth prospects. The current index is expected to reflect recent events, including energy-price fluctuations and geopolitical tensions. Traders will focus on any surprises relative to forecasts, as they can provoke short-term swings in euro-related currency pairs. In the absence of other significant eurozone releases, the Sentix indicator may become the key factor shaping market sentiment during the day.
There are no fundamental UK releases today. Although overall risk sentiment remains fragile, the pound shows slight gains. Any signs of increased concern about the global economic outlook could trigger a flight to safer assets. Also monitor Bank of England speakers closely: any hint toward easing would quickly cool pound-buying enthusiasm.
If data match economists' expectations, prefer a Mean Reversion strategy. If data deviates significantly from forecasts, prefer a Momentum strategy.
Buy on a breakout of 1.1681; targets: 1.1702 and 1.1722
Sell on a breakout of 1.1648; targets: 1.1620 and 1.1590
Buy on a breakout of 1.3435; targets: 1.3460 and 1.3488
Sell on a breakout of 1.3405; targets: 1.3373 and 1.3341
Buy on a breakout of 158.20; targets: 158.45 and 158.80
Sell on a breakout of 157.96; targets: 157.72 and 157.40
Seek sells after a failed breakout above 1.1682 on a return below that level
Seek buys after a failed breakout above 1.1648 on a return to that level
Seek sells after a failed breakout above 1.3445 on a return below that level
Seek buys after a failed breakout above 1.3410 on a return to that level
Seek sells after a failed breakout above 0.6709 on a return below that level
Seek buys after a failed breakout above 0.6692 on a return to that level
Seek sells after a failed breakout above 1.3901 on a return below that level
Seek buys after a failed breakout above 1.3882 on a return to that level
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