Dollar Soars on Strong Employment Report
Mar NFP added 180k jobs, much higher than expectation of 120k. Feb’s job growth was also revised up from 97k to 113k. Unemployment rate unexpectedly fell to 4.4% from 4.5%, meeting last Oct’s low. Meanwhile average earnings rose by 0.3%. Dollar reverses yesterday’s loss against Euro which reached a 2 year high and dips back below 1.34 level. Meanwhile, Sterling continues yesterday’s post BoE meeting weakness and extend further southward against dollar.
Daily Pivots: (S1) 1.3374; (P) 1.3407; (R1) 1.3460;
After reaching new 2 year high of 1.3440, Euro reverses its gain in early US session on broad based dollar strength. 4 hours RSI’s pull back from overbought region indicates an intraday top is already in place in 1.3440 and bias is turned to the downside for 1.3352 support. Break of this support will argue that a short term top is in place and deeper decline should be seen towards 1.3253 cluster support (50% retracement of 1.3070 to 1.3440 at 1.3255).
Note that with bearish divergence in 4 hours MACD and RSI as background, risk of a short term reversal has increased. Sustained break of 1.3253/55 clusters support support will have short term rising channel taken out too, indicates that the whole rise from 1.2865 has already completed and should bring deeper decline towards next cluster support at 1.3086 (61.8% retracement of 1.2865 to 1.3440 at 1.3085). However, further rise is still in favor as long as 1.3253/55 cluster support remains intact. break of 1.3440 will indicate recent rally has resumed for 1.3668 (04 high).
In the bigger picture, firstly, with EUR/USD still trading comfortably within medium term rising channel (1.1639, 1.2483, 1.2978) medium term up trend from 1.1639 is still in progress. Such up trend is interpreted as having first move completed with three waves up to 1.2978, subsequent sideway consolidation completed at 1.2483. Rise from 1.2483 has made a top at 1.3364 but subsequent correction has completed with three waves down to 1.2865 already. The current rise from 1.2865 should represent resumption of this whole up trend. Sustained break of 1.3364/09 resistance zone will confirm this and bring further rise towards 1.3668 resistance (04 high)
However, sustained break of 1.3085/86 cluster support will dampen the above view and warn that the whole medium term up trend from 1.1639 might have completed earlier then we thought. Focus will be turned back to medium term rising channel (now at 1.2914).
Shing-Ip Tsui is the founder and CEO of
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