EUR/USD holds gains above the round level of 1.0800 in Friday’s New York as the United States (US) Nonfarm Payrolls (NFP) report showed that Average Hourly Earnings declines expectedly in June. Average Hourly Earnings data is a measure of wage growth that has been a major driving factor behind high inflation in the service sector. Annually, the wage growth measure declined to 3.9%, as expected, from May’s reading of 4.1%. On month, the economic data grew at an expected pace of 0.3%, slower than the former release of 0.4%. This has diminished fears of price pressures remaining stubborn.
Meanwhile, the number of individuals hired by employers in June came in at 206K, higher than estimates of 190K but lower than the prior release of 272K. The Unemployment Rate rose to 4.1% from expectations and the prior release of 4.0%. Higher-than-expected payrolls and the expected decline in the wage growth measure would less likely influence market speculation for Federal Reserve (Fed) rate cuts.
The US Dollar (DXY) was already under pressure amid growing speculation that the Federal Reserve (Fed) will start reducing interest rates from the September meeting. The US Dollar Index (DXY), which tracks the GreenbackÂ’s value against six major currencies, has extended its losing spell for the seventh trading session and has posted a fresh three-week low near 105.00.
Traders raised rate-cut bets for September heavily due to various factors, such as Fed Chair Jerome Powell’s sheer confidence that the central bank has made considerable progress in inflation, easing labor market strength, and contraction in the Services PMI.Â
The June ADP Employment Change report showed unexpectedly slowing private sector hiring. In the same period, the Services PMI showed a contraction in the sector and dropped to its lowest level in four years.
EUR/USD extends its winning spell for the seventh day on Friday. The major currency pair strengthens after stabilizing above the 20-day and 50-day Exponential Moving Averages (EMAs), which trade around 1.0750 and 1.0770, respectively. The overall trend of the shared currency pair has also strengthened as it has jumped above the 200-day EMA, which trades around 1.0800.
The Symmetrical Triangle formation on the daily timeframe exhibits a sharp volatility contraction, which indicates low volume and narrow ticks.
The 14-day Relative Strength Index (RSI) reaches 60.00. Should the bullish momentum be triggered if it breaks above this level?
The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months’ reviews ?and the Unemployment Rate are as relevant as the headline figure. The market’s reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.
Leave a Reply