Strong labor market weakens EURUSD

04 March 2024 78
Strong labor market weakens EURUSD

This week's key economic data will be Friday's monthly US jobs report.

Economists forecast that job growth will slow to 195,000 in February after a sharp increase of 353,000 a month earlier, which was the biggest gain in the past year. The unemployment rate is expected to remain at 3.7%, while hourly wage growth is likely to slow.


Federal Reserve Chairman Jerome Powell is expected to reiterate his statement that there is no rush to cut interest rates, especially after new inflation data showed that price pressures persist.


Powell will speak on Capitol Hill, where he’ll deliver his semiannual monetary policy testimony to a House committee on Wednesday and a Senate panel on Thursday. The US central bank chief and nearly all of his colleagues have said in recent weeks that they can afford to be patient in deciding when to cut rates given underlying strength in the US economy. Powell is expected to maintain a hawkish stance in his semiannual testimony to Congress, signaling to markets that the Fed is in no hurry to cut rates.


“The danger of moving too soon is that the job’s not quite done, and that the really good readings we’ve had for the last six months somehow turn out not to be a true indicator of where inflation’s heading,” Powell said in an interview with CBS’s “60 Minutes” on Feb. 5.


That cautious approach has been validated in recent weeks by data showing inflation picked up last month, which is putting downward pressure on EURUSD.


If Friday's data show a strong labor market (figures are well above forecast estimates), it will lead to a sharp decline in EURUSD, the 1.0700 level is likely to be broken.


The final recommendation is to sell EURUSD if the number of employed in the non-agricultural sector exceeds the value of 300,000 in Friday's report.

The profit could be fixed at the level of 1.0700.

A Stop-loss could be placed at a distance equal to the interval between the opening price and Take Profit.


This content is for informational purposes only and is not intended to be investing advice.

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