Good day forex traders.
Welcome to our weekly review of the popular currency pair. I hope trading was fantastic for you.
In the previous EUR/USD forecast we noted that the currency pair was pushing above with a bullish momentum. 1.24 remained a strong resistance that is yet to be broken.
Looking at the EUR/USD chart above we note that the currency pair is above 1.24 at the moment. Should it remain firmly so, investors sentiments will likely shift towards a bullish stance and this may send the EUR/USD towards 1.26.
BBC reports on the latest US Non-Farm Payroll”
The US labour market barrelled forward in January, as employers added more jobs than expected and wage growth was its strongest in more than eight years. US payrolls expanded by 200,000 last month, driven by hiring in construction, food services and health care, the US Labor Department said. The average hourly wage for private sector workers crept up 2.9% compared to January 2017. The unemployment rate held steady at 4.1%.
Economists have puzzled over lacklustre wage growth, which has lagged in prior months despite the decline in the unemployment rate. Without higher wages, economists have warned that economic growth will be difficult to sustain, since consumer spending plays a large role in the US economy.
The Labor Department report, released on Friday, showed average hourly earnings for private sector workers rose 9 cents in January, to $26.74. For the year, the increase was 75 cents. The wage uptick coincided with mandatory minimum pay increases in 18 states. Major employers such as Walmart have also said they planned to boost earnings or provide bonuses. Those factors may have helped lift last month’s numbers, but they make it harder to say if the increases will continue, said Lindsey Piezga, chief economist for fixed income at Stifel, based in Chicago. “While that is encouraging, what we really need to see is sustained wage growth, not one-off, month-to-month volatility,” she said.
Other data in the report was a reminder that monthly gains can be fleeting.
For example, the unemployment rate among black workers jumped in January to 7.7%, rising after falling to a record low of 6.8% in December. President Donald Trump had trumpeted that decline as evidence of economic improvement. ”
The general theme of the US employment situation remains. More wage growth is required due to the positive effect it has on consumption which is one of the main segment of the US economy. It is very likely that without a strong increase in purchasing power of the masses, the momentum may fizzle.
In the meanwhile we are also seeing new highs across the Atlantic. BBC reports ”
The economy of the 19-nation bloc grew by 2.5% last year, according to Eurostat, the strongest growth since the 3% rate seen in 2007.
Eurostat also said that the eurozone grew by 0.6% in the final three months of 2017.
The European Central Bank has been carrying out a huge stimulus programme in an attempt to drive eurozone growth.
That programme has seen the bank slash its main interest rate to zero, and spend billions of euros a month on buying financial assets.
Growth in the eurozone has been picking up and it is now regarded as one of the strongest parts of the global economy. ”
With the Eurozone bouncing back on track and progressing collectively, this will likely create uplift for the euro currency.
ECB President Draghi is due to speak early this week. Do monitor for any hints of policy outlook, especially regarding the ongoing stimulus program.
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