Dollar softens even after the strong US jobs data. EURUSD remains BearishPosted on Monday, March 13 2017 at 8:15 pm GMT+0000
Dollar: Dollar softens even after the strong US jobs data.
The dollar failed to continue its rally following the US jobs data on Friday. The wage growth data missed estimates, and might affect the future growth prospects.
Wages rose by 0.2% missing estimates of a rise of 0.3%, this disappointed the markets, as the wages are considered a key indicator of inflation, when compared to the growing number of employed people.
Failure of the dollar to continue rallying after positive NFP that shown a decreasing unemployment rate, means that all those economic improvements was already priced, and that the dollar has entered into the overbought area, and therefore, recording new highs has become doubtful.
The rate hike probability is still at its highest level, despite a slight decline from 100% to 98%. Markets are now focused to get more insight into whether the Fed will materialize more rate hikes than the three currently expected for 2017. That pace has become priced, and we now need new motives continue strengthening the dollar.
Such as new trump’s regulations or any improvements on his plans for fiscal stimulus, a rate hike during during this meeting wouldn’t be enough to push the Dollar higher.
Euro: The euro is still Bearish in the long term, below 1.0820
Euro hit 3-weeks high on Friday, helped by positive developments in the euro area, and the broadly softer dollar.
In addition to the obvious improvement in various European economic data, the ECB president Mario Draghi raised growth and inflation forecasts for the current year. That boosted the euro, even with maintaining low interest rates and expansionary monetary policy.
The long term path remains bearish, and the Euro is currently testing the key level at 1.0720, above this level the 1.0760 level appears as another important resistance. The most critical level remains the 1.0820, as any break above it could challenge the prevailing Bearish structure, and pave the way for the 1.1000 level.