Yesterday, the euro closed the day at the level of its opening, which, on the one hand, can be taken for consolidation before a further decline, and on the other hand, a stop before a reversal, since important data on US employment will be published today. A statement by President Trump about the refusal to forcefully resolve the conflict with Iran briefly increased risk appetite in the stock market. The S&P 500 grew by 0.44% on Wednesday while it climbed by 0.67% yesterday as a new record was established (3275). Yields on US government bonds after a sharp increase on Wednesday remain at the same level. This is still a sign of the extinction of unexpected political optimism and, as a consequence, the further strengthening of the dollar. But if the stock market continues to ramp up, the dollar will weaken. We do not expect the euro to turn into medium-term growth, but risk appetites will affect the depth of the upward correction. From this perspective, today’s US employment data is particularly important.
The forecast for Non-Farm Employment Change for December is 162 thousand after the November figure of 266 thousand. Our calculation on the basis of weekly unemployment applications gives a comparable figure of 155-170 thousand. If the November indicator is revised downward, which is very likely from similar calculations (approximately up to 210 thousand), then the obtained values will be optimal for continued growth in the stock market, but insufficient for the risky growth of the euro. In this scenario, which we take as the main one, we expect the euro to fall further to the nearest target of 1.1073 – to the point of coincidence of the Fibonacci level of 123.6% with the MACD line on the daily chart.
Considering yesterday’s market indecision, we question if the targeted support of 1.1073 and the price completion of the blue line of the price channel at the level of 1.1045 can be overcome, as previously thought. Such indecision of the market is also indicated by the Marlin oscillator, which lies in a horizontal trend.
On the four-hour chart, the Marlin oscillator indicates a slight desire to correct the market up. In general, the mood on this chart remains down.
Next week we can see the correctional growth of the euro, the height of which will depend on the new incoming data, primarily political. Forecasts on macroeconomic data for the next week in favor of the dollar (increase in inflation indices in the US and worsening trade balance in the eurozone).
Origin: InstaForex
