EUR/USD: To be continued, unemployment, job creation and American wages

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Currency traders will have to deal with a very important publication, one hour before the reopening of Wall Street, whose doors remained closed yesterday as a reminder, due to the national day of mourning in tribute to President Jimmy Carter, who died last month at the age of 100 years.

This meeting is the NFP. Behind this acronym hides the report on private employment (excluding agriculture) in the United States, the Non-Farm Payrolls. This monthly barometer of employment tensions is particularly scrutinized by the Fed, in the sense that it can read advanced signs of inflation. Employment, with its insolent resilience across the Atlantic, is in such good health that it pushes the Federal Reserve to act with the greatest restraint on the rate cut lever.

“This report on employment is important because for several weeks, the markets have been moving in “good news is bad news” mode: good activity or employment figures have led to an increase in volatility on the stock markets, because pushing back the prospect of further rate cuts but also with the risk that high bond rates will end up really impacting the American economy, by increasing the cost of credit for households and businesses”, explains Alexandre Baradez (IG France).

“If the employment report just now shows figures higher than the consensus, the “good news is bad news” reaction observed previously could continue. All the elements will be important to follow: creation of non-agricultural jobs (NFP), unemployment rate and wage growth.”

Verdict this Friday at 2:30 p.m. Some benchmarks to know in advance: the unemployment rate is expected to be stable at 4.2% of the active population, job creation in the private sector excluding agriculture is expected at 164,000 in December, compared to 227,000 in November. Finally, the dynamics of average hourly wages is expected to slow slightly, to +0.3% in December, compared to +0.4% in November.

In the immediate future, while waiting for these key figures, the Euro is stabilizing. The pair even nibbles a few pips at midday in the wake of rather reassuring figures on French consumption and industrial production.

At midday on the foreign exchange market, the Euro was trading against $1.0310 approximately.

KEY GRAPHIC ELEMENTS

The reaction movement carried out at the end of last week, encouraged on Monday by press information denied by D Trump, is already running out of steam.

This surge is not likely to counter the underlying bearish bias, but sends a legitimate message of protest. The 50-day moving average (in orange) continues to constitute a solid technical and graphical barrier.

Once perfect parity is reached, namely 1$ for 1€, a vigorous buyer reaction of protest could be put in place.

MEDIUM TERM FORECAST

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

Our entry point is at 1.0309 E. The price target for our bearish scenario is at $1.0001. To preserve the invested capital, we advise you to position a protective stop at $1.0401.

The expected profitability of this Forex strategy is 308 pips and the risk of loss is 92 pips.

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