The Dollar Moves Higher, Jobs Report In Focus
The Greenback Registers Hefty Recovery, U.S. Jobs In the Limelight
by Bogdan Giulvezan
Friday the greenback posted its biggest surge since June, amid a massive sell-off experienced by the bond markets. US Dollar strength drove EUR/USD to a low of 1.2060, retreating off highs above 1.2220, while the GBP/USD fell briefly below 1.3900 before stabilizing in close vicinity of 1.4000.
The Dollar’s movement will be affected early in the week by PMI data and later during the week by the speech of Fed Chair Powell, topping it all off with the Non-Farm Payrolls scheduled Friday.
The week opens with the release of the U.S. ISM Manufacturing PMI, scheduled Monday, March 1st at 3:00 pm GMT. The report tracks the opinions of purchasing managers from the Manufacturing sector regarding overall business conditions, including supplies, employment, production and more. It acts as a leading indicator of economic strength and usually, numbers above the anticipated 58.7, strengthen the currency.
Wednesday, March 3 we turn our eyes towards the United Kingdom for the release of the Annual Budget, which includes the government’s projected spending and income levels, financial objectives and income/borrowing levels among others. The release may have a notable impact on the Pound but it may also go mostly unnoticed, although it’s considered of high importance.
Fed Chair Powell will speak Thursday March 4, about the US economy at an event organized by the Wall Street Journal. The event will be held online and audience questions are expected, which is always a potential trigger for increased volatility.
The main event of the week is the release of the US Non-Farm Payrolls, scheduled Friday, March 5 at 1:30 pm GMT. The report is widely considered the most important gauge of the employment situation in the United States and usually has a strong impact on the US Dollar. The expected change is 133K, which is an improvement from last week’s 49K. Numbers above this forecast usually have a positive impact on the greenback but surprises are always a possibility.
Chart Analysis – EUR/USD
Last week the pair respected support and resistance levels to the T, bouncing lower after an apparent break of 1.2220 and then rebounding at 1.2060 support. Although the drop was significant, the Relative Strength Index is not yet oversold, thus the bearish move may extend lower, closer to 1.2000 psychological level.
The MACD is angled south, with the lines spread apart, indicating downside momentum, which adds to the possibility of a break of the current support. However, the probability of bounces will increase as soon as the RSI enters oversold territory.
