The Non-Farm Payroll report showed that 223 thousand jobs were added in April. This was only slightly softer than the average forecast around 228K. This is still a good rebound from the disappointing March print, which was revised even lower from 126K to 85K. The unemployment rate fell to 5.4% from 5.5% as expected. Average earnings per hour rose only 0.1%, and the March print was revised down from 0.3% to 0.2%.
All in all, this was a slightly soft NFP report, with a drop of optimism. It is not enough optimism for the market to firmly believe that the FOMC will raise rates in September, which is the current consensus. In the short-term therefore, the correction against USD strength is likely to continue, but I don’t believe this weakness will extend further into the medium-term if we get another NFP above 200K.
After the NFP report, EUR/USD stopped a bearish attempt. Even though EUR/USD loss the bullish momentum, it is keeping a slight bullish bias as it held above the 200-hour SMA. Now a push above 1.1286 should continue the bullish correction, with pressure towards 1.1390, then the next key support/resistance pivot around 1.1460.
To the downside, a break below today’s low of 1.1178 should open up the 1.1065 low.
The GBP/USD has been bullish during the week, but stalled ahead of the NFP report. After the jobs data, it appears to be maintaining the bullish stance, hlding above the moving averages, with the RSI holding above 40.
The pressure appears back towards the 1.5522 high with risk of extending to the 1.56-1.5620 support/resistance pivot area.
With both he GBP/USD and EUR/USD today’s NFP is not likely to keep it from its recent bullish correction. However, the fact that the April print was still above 200K gives us reasons to believe that the USD would not fade for too long. Key resistance levels on the year should be respected, 1.1460 for EUR/USD and 1.5620 for GBP/USD.
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