EUR/USD: The Fed feverishly scrutinizes employment statistics

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Thanks to a welcome decline in the American 10-year, the Euro/Dollar returned to a level close to its 50-day moving average, the slope of which is still bearish, as the statistical high point of the second part of the week, namely the publication of the NFP (Non Farm Payrolls).

Meet at 2:30 p.m. to discover the main lessons from the federal report, for which the financial community expects a stabilization of the increase in wages (+0.3%) and the unemployment rate (3.8%), and a reduction in number of positions created in the private sector (excluding agriculture), at 238,000. Earlier in the week, the ADP firm survey and weekly registrations for unemployment benefits showed the persistence of tensions on employment, mechanically generating tensions inflation… The Fed, ultra dependent on data, will have food for thought here.

As a reminder, the Federal Reserve completed an FOMC on Wednesday which unsurprisingly ended with a monetary status quo. The Washington Monetary Institution has clarified that it is not considering lowering rates until inflation falls more significantly. For the June FOMC, we should once again expect a status quo. The CME Group’s FedWatch tool puts this scenario at more than 91% probability.

“If we had to remember one sentence from his speech, it could be this: ‘I don’t know if inflation will fall enough, or not enough, to merit a rate cut.’ More generally, his Yesterday’s speech was very often in a “and at the same time” mode, alternating elements of language that were sometimes harsh but counterbalanced quite quickly by more “dove” phrases, noted “Alexandre Baradez (IG France).

On the agenda this Friday, to follow in priority the American ISM services at 4:00 p.m. but above all, as a highlight, the NFP (Non Farm Payrolls) report on American private employment. at 2:30 p.m.

At midday on the foreign exchange market, the Euro was trading against $1.0745 approximately.

KEY GRAPHIC ELEMENTS

THE pullback very clear Thursday 04/18 on a resistance zone ($1.0693) will invite people to take short positions again on the currency pair EURUSD, especially since the break of the 50-day moving average (in orange) by its 20-day counterpart (in dark blue) took place at a relatively large angle. The succession of high points (12/28, 03/08, 03/21, 04/09 and 04/26) is now clearly decreasing.

MEDIUM TERM FORECAST

Considering the key graphical factors that we have mentioned, our opinion is negative in the medium term on the Euro Dollar (EURUSD).

Our entry point is at 1.0745 USD. The price target for our bearish scenario is at 1.0436 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0806 USD.

The expected profitability of this Forex strategy is 309 pips and the risk of loss is 61 pips.

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