Previous:
Trading on the Euro on Friday closed up. Before the US jobs report was released (Non-Farm Payrolls, NFP), the rate corrected to 1.0954. Following the release, the Euro renewed its daily minimum against the dollar, but this bearish impulse was quickly extinguished. Traders bought Euros in anticipation of a Macron victory in the second round of France’s presidential election, giving the NFPs secondary importance. By the end of the day, the Euro had risen to 1.0999.
The US created 211,000 new jobs outside the agricultural sector in April against a forecast of 190,000 and a previous reading of 79,000. The figure for February was upgraded from 219,000 to 232,000 and downgraded for March from 98,000 to 79,000. The aggregate revision amounts to -6,000.
Unemployment fell to 4.4% (forecast: 4.6%, previous reading: 4.5%). Average hourly earnings grew by 0.3% MoM in line with expectations against a previous reading of 0.1% (revised downwards from 0.2%). The participation rate came to 62.9%, down from 63.0% the previous month.
Market expectations:
Trading on the Euro has opened up this morning (Monday) in the wake of Emanuel Macron’s victory, who is now President-elect of France. In the second round, the leader of “En Marche!” won 66.06% of the vote, with National Front leader Marine Le Pen on 33.94%.
Having updated the maximum, traders have started cashing in on their long positions. Buy on expectations, sell on facts. The EUR/USD has since fallen from 1.1021 to 1.0957. Monday against Friday has already worked out given that buyers are now approaching Friday’s minimum.
I’m predicting a testing of 1.0950 level, followed by an upwards correction towards 1.0995. From the trend, I’m expecting the market in any case to present buyers with a good opportunity for cashing in long positions.
A slide for the Euro below 1.0935 will end the bullish trend given that since 1.0940 level was broken through on Thursday the 4th of May, we can’t return to a consolidation zone where the price was previously trading for 7 days. This is a bad sign, indicative of a change in sentiment.
