EURUSD Technical Analysis 2014, 27.04 - 04.05: Ranging - page 2
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newdigital, 2014.05.02 19:06
EUR/USD, Gold React Violently to Mixed U.S. Jobs Data
Volatility was highlighted on Friday in the foreign currency and commodity markets after the release of a U.S. Non-Farm Payrolls report that beat expectations. The report showed the U.S. economy in April added the most jobs in more than two years.
According to the latest data, the U.S. labor force added 288,000 new jobs in April, its strongest showing since January 2012. Economists were looking for a gain of 216K. The unemployment rate also dropped more than expected to 6.3%. This was its lowest level since September 2008. The negative aspects of the report included a drop in the size of the labor force and no change in average hourly wages.
The average hourly wages portion of the report caused the most uncertainty, triggering the volatility. This portion of the report is watched closely by the Fed, taking the place of the previously watched unemployment rate. The weak average hourly wages growth is an indication that inflation is non-existent and this is a major concern for the Fed.
The EUR/USD rebounded after the jobs report led to a sharp break. The upside momentum puts the Forex pair in a position to challenge resistance at 1.3872 and 1.3888. Short-covering ahead of next week’s key European Central Bank decision regarding additional stimulus may be the reason for today’s intraday rally.
Today’s mixed jobs report triggered a similar response from the GBP/USD. This market has a genuine upside bias because speculators believe the Bank of England will begin to seriously consider an interest rate hike sooner than expected. Technically, the Forex pair is trading inside an uptrending channel with 1.6921 the upper boundary and 1.6787 the support.
The U.S. jobs data triggered a volatile outside move in the June Comex Gold market because of the wicked U.S. Dollar trading action. After an initial break, however, gold turned higher because of the escalation of violence in Ukraine. Technically, the main trend is down on the daily chart, but the market is poised to take out $1306.60, a move which would turn the main trend to up. The major support remains $1268.40.
June Crude Oil futures finished higher. Traders seemed to be immune from the jobs data and the bearish supply situation. The market stopped short of changing the main trend to down on the daily chart and no appears to be in a position to retrace the break from $104.10. This will be considered a normal correction. However, it may present an opportunity next week for short-sellers to initiate new positions.