Since the beginning of this month, the US dollar has shown positive trend against currency majors. The dollar index (#DX) has updated local highs and overcome the 100.00 mark. The coronavirus epidemic is still in the focus of attention, which supports the demand for safe assets. The number of infected with COVID-19 virus in the world exceeded 3.7 million. World Central Banks forecast a significant drop in GDP. Recent economic releases confirm the expectations of regulators. The trade conflict between Washington and Beijing has started escalating again. US President Donald Trump accuses China of negligence, which led to an outbreak of coronavirus worldwide. In this regard, the President has threatened to break last year's trade agreement with China if it doesn't purchase American goods in the promised volumes. China, in turn, denies all accusations.
Currently, investors have taken a wait-and-see attitude before the publication of labor statistics in the US for April, on Friday, May 8, at 15:30 (GMT+3:00). This report may have a significant impact on the dynamics and further alignment of forces on currency majors.
Recent economic releases from the US were pessimistic. ISM manufacturing PMI slowed down from 49.1 to 41.5. The consumer confidence index counted to 86.9 compared to the previous value of 118.8. Data from ADP indicated that in April, the US economy lost over 20 million jobs. ISM non-manufacturing PMI fell from 52.5 to 41.8.
Experts expect a deterioration in key indicators: the number of people employed in the US nonfarm sector will decrease by 22 million; the growth in average hourly earnings will remain unchanged at 0.4%; the unemployment rate will increase from 4.4% to 16.0%. We recommend paying attention to the difference between the actual and forecasted values.
Let's consider the current technical pattern on the EUR/USD currency pair
- Support levels: 1.0775, 1.0730, 1.0700
- Resistance levels: 1.0820, 1.0855, 1.0885
- - The price has fixed below 50 MA and 100 MA;
- - The MACD histogram is in the negative zone.
The EUR/USD currency pair has become stable. A trading instrument is consolidating. At the moment, the following local support and resistance levels can be identified: 1.0775 and 1.0820, respectively. Indicators signal the power of sellers:
Nevertheless, we recommend opening positions from key levels.
If the report on the US labor market turns out to be weak, we expect a recovery of EUR/USD quotes. The movement is tending to 1.0860-1.0900.
An alternative could be a further decline in the EUR/USD currency pair to the zone of the 1.0700 round level.
When following positions, we recommend using a trailing stop.
by , 2020.05.08
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
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