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EUR/USD Weekly Forecast 8 Jan 18

Hello fellow forex traders.

Welcome to 2018 and our weekly review of the popular EUR/USD currency pair.

As liquidity flows back into the market, it is important to understand the underlying sentiments that the fuel the price action.

In our previous review we noted on a possible breakout. Caution was advised as the range narrowed.

Looking at the EUR/USD chart above we observe that the breakout did happen and the currency pair is now testing the 1.2 resistance.

The yellow lines are significant support and resistance levels and hence to be watched out for. Further bullish momentum may open up 1.22. A clean break to the upside of 1.2 will be required prior to that. On the downside, a failure of the bullish pressure will likely have the EUR/USD falling back to 1.18.

In the latest US Non-Farm Payroll there were some concerns raised by analysts. BBC reports ”

US employers added fewer jobs than expected in December, capping a year of slowing jobs growth.

Non-farm payrolls rose by 148,000 last month, amid losses in the retail sector, the Labor Department said.

But the unemployment rate held steady at 4.1%, the lowest it has been since 2000.

Analysts say the tightening labour market, which makes it harder to hire, is driving a broader slowdown in job creation.

The US has experienced years of economic expansion, which has boosted economic growth above 3% in recent quarters and produced annual job gains exceeding 2 million for the past seven years.

The gains are making inroads among parts of the workforce that have been slower to benefit from the economic recovery.

Among black workers, for example, the unemployment rate fell to 6.8% last month – the lowest since at least 1972, when Labor Department data starts.

Nationally, the unemployment rate has hovered at 4.1% since October, a rate not seen since 2000.

Economists have been puzzled that the lower rates have not produced stronger wage growth in recent years.

Annual wages growth crept up from 2.4% in November to 2.5% as average hourly earnings rose by nine cents. That is similar to rates in previous months.”

The pace of creation of jobs have been on a downtrend. Having said so, this may be attributed to the fact that with the low employment rate, creation is on a balancing scale with the labor supply.

The growth of wages is of a more peculiar note as it remains slow. This is not expected with the recovery of the jobs market since 2008. As the economy is basically consumption, there is concern that the sub par wages fizzles the growth momentum. This is likely to be a red flag if the trend continues.

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