US March employment data to move the markets

In the shadow of Trump’s tariffs announcement, the USD tumbled against its counterparts yesterday and markets today may turn their attention to the release of March’s US employment report. The Non-Farm Payrolls (NFP) figure is expected to drop further reaching 135k if compared to February’s 151k, while the unemployment rate is expected to remain unchanged at 4.1% and the average earnings growth rate to slow down marginally reaching 3.9%yy. Should the actual rates and figures meet their respective forecasts, we may see the USD renewing its downward motion as all indicators align in pointing a possibly weakening US employment market. Overall given the persistence of inflationary pressures as expressed by the acceleration of the Core PCE rate for February, further easing of the US employment market may renew the market’s expectations for the Fed to cut rates yet Trump’s tariffs are expected to enhance inflationary pressures in the US economy. The actual rates and figures rarely meet their forecasts and should the US employment data for March imply a tighter-than-expected US employment market we may see the USD getting some support as it would enhance the Fed’s doubts for further easing of its monetary policy.

EUR/USD rallied yesterday breaking the 1.0940 (R1) resistance line, now turned to support. We adopt a bullish outlook, as the price action was able to form a new higher peak. We intend to keep our bullish outlook as long as the upward trendline remains intact yet we are worried that the pair’s bulls may have reached beyond their grasp. It’s characteristic that the RSI indicator surged above the reading of 70, implying a strong bullish sentiment of the market for the pair, yet at the same time may also imply that the pair is at overbought levels and may be ripe for a correction lower. Similar signals are being send by the price action breaching above the upper Bollinger band. Hence we adopt the bullish outlook yet also issue a warning for a possible correction lower. Should the bulls remain dominant as expected, we may see the pair nearing if not breaching the 1.1210 (R1) line, while even higher we note the 1.1480 (R2) resistance level. Should the bears take over we may see the pair reversing course, breaking the 1.0940 (S1) line, continuing lower to break the prementioned upward trendline in a first signal that the upward motion of the pair has bee interrupted and continue to drop below the 1.0730 (S2) support level, making a bearish outlook currently very remote.

At the same time as the US employment report for March, we also get Canada’s employment data for the same month. The unemployment rate is expected to tick up to 6.7% if compared to February’s 6.6% and the employment change figure is expected to rise to 10.0k if compared to February’s disappointing 1.1k. Overall, we are getting some mixed signals from the forecasts, yet the Canadian employment market seems to remain loose, which in turn may enhance BoC’s dovishness thus weakening the Loonie.

USD/CAD tumbled yesterday testing the 1.4100 (S1) support line. We are not convinced for the pair’s bearish tendencies yet however we have to note that the RSI indicator dropped considerably implying an enhancement of the bearish sentiment, while the price action has dropped below the lower Bollinger band implying that oversold conditions apply and that the pair may be ripe for a correction higher. For the adoption of a bearish outlook we would require the pair to break the 1.4100 (S1) support line clearly and start aiming for the 1.3945 (S2) support level. For a bullish outlook, we would require the pair to rise, break the 1.4280 (R1) resistance line and continue to break also the 1.4465 (R2) resistance level, thus is currently remote.

その他の注目材料

Today we get Germany’s industrial output for February, Sweden’s and the Czech Republic’s preliminary CPI rates for March, Euro Zone’s and the UK’s construction PMI figures for March, while on the monetary front we highlight the speech of Fed Chairman Powell and note that also Fed Governor Barr is scheduled to speak. On Monday’s Asian session, we get Australia’s consumer confidence for April.