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Yesterday, the greenback railed as traders locked in profits after the publication of the Nonfarm Payrolls, published on Friday. The delayed reaction is quite logical. Initially, traders were disappointed with the results of the NFP report. They considered the figure to be very low. So, at that moment, the US dollar was declining. Only at the end of trading, investors compared the number of new jobs with the unemployment rate, which had fallen to the appropriate level. Therefore, it did not matter that the economy assed lesser jobs than expected because the labor market had reached equilibrium. Hence, the US dollar changed its trajectory. However, it was already too late and the market closed. On Monday, the pound sterling failed to complete the downward movement due to the weekend in the United States. As trading floors in the US remained closed, there is almost no activity in the market. So, only yesterday the Us dollar was able to fully recouped its losses incurred on Friday evening. With such strong growth, counter currencies gave in to the US dollar. Only the euro managed to hold ground amid the upbeat third estimate of EU GDP for the second quarter.
The first two estimates showed a change in the economic downturn of 1.3% with an increase of 13.6%. The third estimate indicated an increase of 14.3% amid an upwardly revised estimate of the first quarter. GDP decline totaled 1.2%. Such optimistic data helped the euro withhold pressure.
Eurozone GDP:
Today, there will be no market-moving events. Even US open jobs data is unlikely to have an impact on the market. The total number of jobs openings is projected to decline to 9,900 from 10,073. Besides, the content of the report does not contradict NFP data and only complements it. Unemployment has fallen to an optimal level, so the number of open vacancies is likely to drop steadily. In fact, jobs openings data will be another confirmation that the labor market is gradually recovering. As the reaction to this report is likely to be muted, the activity will slow down. It may be calm before the storm as tomorrow, the ECB meeting will take place.
US Jobs Openings:
A correction from the low of 1.3600 ended near the resistance level of 1.3880/1.1905. The price slowed down near this level and then retreated. Technical instruments signaled short positions: the resistance level and the crossing of the Fibonacci level of 38.2. Apart from that, the RSI indicator signaled that the pair was overbought.
An elongated correction is visible on the daily chart. Yet, it does not undermine the downward cycle that started in early June.
Outlook:
Apparently, the price may gradually recover as a part of the correction. The first level is located at 1.1800 where there is an intersection with the Fibo level of 23.6.
Technical indicators give a sell signal on the short-term and intraday charts after the rebound of the price from the resistance level.
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