10.06.201910:13 Forex Analysis & Reviews: EURUSD: The risk of the Fed lowering the interest rate has increased significantly after the labor market data

A slight decline in the euro on Friday morning was due to a weak report on industrial production in Germany.

According to the data, in April of this year, industrial production in Germany decreased by 1.9% compared with March. It is worth noting that the decline in production is observed for the second month in a row, which in the future will have a negative impact on economic growth rates. Economists had expected production to decline by only 0.5% in April compared with March.

The Ministry noted that the main decline is due to the deterioration of the business climate, as well as falling orders in the manufacturing industry. Thus, production in the construction sector grew by only 0.2%, while in the manufacturing industry, it fell sharply by 2.5%. Compared with April last year, industrial production in Germany fell by 1.8%.

However, in the second half of the day, amid weak data on the US labor market, as well as talks that the leadership of the US Federal Reserve during the June meeting will announce the start of a series of lower interest rates, strengthened the European currency.

Let me remind you that quite recently, Fed Chairman Jerome Powell, though he urged not to give much importance to rumors about the possibility of lowering interest rates this summer, a number of speeches made by Fed officials said something completely different. The probability of lowering interest rates at the meeting on June 18-19 is gradually increasing.

As noted above, the weak growth of the US labor market led to a sharp drop in the US dollar. According to the US Department of Labor, the number of non-agricultural jobs in May of this year grew by only 75,000, while the unemployment rate remained unchanged during the reporting period, reaching 3.6%. Annual wage growth remained at 3.1%.

Economists expected that the number of new jobs would be 180,000, with an unemployment rate of 3.6%.

Given the fact that the US economy has created fewer jobs than was thought, the pressure on the dollar has increased.

On Friday, a report was also released from the US Department of Commerce, indicating that the inventories of companies in the United States in April rose again by 0.8%.

Economists had expected stocks to grow by 0.7%. The most significant growth was observed in the increase in stocks for cars by 3.8%. I recall that the inventories of companies in the 1st quarter of this year made a positive contribution to GDP growth of 0.6%.

As for the technical picture of the EURUSD pair, further growth of risky assets will be difficult. To return the bullish sentiment to the market, a breakthrough of the resistance of 1.1335 is required, which will give the trading tool an upward momentum and will lead to the update of the month highs around 1.1370 and 1.1400. In the case of further downward correction, more likely, the intermediate support will be the area of 1.1280, while the larger buyers of risky assets will manifest themselves in the area of 1.1250.