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After jumping from side to side, the single European currency decided to end Thursday at about the same values as it started it. This is how investors are preparing for the most important event of the week - the release of the report of the United States Department of Labor. And the most interesting thing is that in fact, yesterday there were all grounds for correction and serious weakening of the euro.
The dollar had enough reasons for optimism, as the data on applications for unemployment benefits turned out to be significantly better than forecasted. In particular, initial applications, the number of which should have increased from 1,435,000 to 1,450,000, decreased to 1,186,000. The number of repeated applications for unemployment benefits fell from 16,915,000 to 16,107,000, although they should have been only up to 16,900,000. And it is quite clear that on the eve of the publication of the report of the United States Department of Labor, a noticeable decrease in the number of applications is an extremely positive factor, inspiring confidence that its content will be better than expected. So this should have helped strengthen the dollar. However, we didn't see this, as investors keep in mind the recent employment data from ADP, which scared everyone. So no one wanted to take risks, and in fact, the market just stood still.
Repetitive Unemployment Insurance Claims (United States):
So, almost the only thing that will be looked at is the unemployment rate itself, which should drop from 11.1% to 10.5%. Also, of interest is the number of new jobs created outside of agriculture, of which there should be as much as 1,620,000. And all this is purely positive. It doesn't matter that the unemployment rate is incredibly high, the trend itself is important. All other indicators of the state of the labor market now do not bother anyone at all. Since it doesn't matter what happens there with salaries or the length of the working week. Now the most important thing is for unemployment to go down. Without this, other indicators do not matter. They will be thought about later. Moreover, the market is overheated and the dollar is oversold. So the market needs a correction. Thus, the content of the report of the Ministry of Labor should be the reason for this very correction. And in many ways, these very expectations provoke the dollar's growth, which is already taking shape. Even if it isn't that strong. The only thing that scares investors right now is the recent ADP employment data. They hint that the content of the Labor Department report may not be as predicted. But we are not talking about the possibility of an increase in the unemployment rate. Rather, only that it will not decrease so much. However, all the same, we are exclusively talking about improving the situation on the labor market, so the question is only about the scale of the dollar's appreciation.
Unemployment rate (United States):
The euro/dollar pair once again found a resistance point in the 1.1900 area, where there was a systematic slowdown and as a result, a reverse movement of the price. Market participants interacting with the 1.1900 coordinates indicates uncertainty in the further upward course, which theoretically can lead to a more significant correction in the market.
Relative to the market dynamics, high volatility indicators are recorded daily, which indicates the prevailing speculative interest in the market.
Looking at the trading chart in general terms (daily period), you can see the vertical movement of the price, which indicates a high degree of overbought of the European currency.
We can assume that if the price is pinned below 1.1800, the most intensive downward development will occur, which will lead to a descent to the area of 1.1700/1.1730 (August 3 low). An alternative scenario will be considered in terms of an amplitude fluctuation in the range of 1.1800/1.1900, where if the price is pinned higher than 1.1920, the upward development will move to a new level.
From the point of view of complex indicator analysis, we see that the indicators of technical instruments at minute intervals signal a sale, due to the downward activity during the Asian session. Hourly and daily periods, as before, signal a purchase by finding the price at a conditional high.
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