The dollar is steadily strengthening despite a new round of political madhouse in the United States. This is largely due to the fact that the flow of political news from America is increasingly reminiscent of waving fists after a fight, which looks amusing, but has no practical meaning. Rather, all this causes bewilderment and ridicule, especially if we talk about another attempt by the Democrats to crank up the scheme with the impeachment of Donald Trump. Such actions are completely devoid of any sense, since the inauguration of Joseph Biden is set to take place on January 20. Democratic leaders justify their intentions by the need to thwart Donald Trump's future attempts to run for US president. Not only is it not funny, but it is also terrifying, as it carries long-term consequences. Moreover, they are extremely negative. After all, the political system of America has always been distinguished by the fact that defeated political opponents calmly retired, and now the Democrats want to arrange a real reprisal, in the spirit of some third world country. This can lead to an even greater radicalization of the political struggle, when the one who is in power, fearing persecution from his political opponents, will hold on to his place in every conceivable and inconceivable way. But while no one thinks about it yet, investors are more likely to look at the fact that the dollar is still strongly oversold and it is urgent to correct this imbalance.
However, the euro has made attempts to grow, which perfectly coincides with the release of macroeconomic reports. The first attempt was made when the eurozone unemployment report was released. The unemployment rate was projected to rise from 8.4% to 8.5%, but to everyone's surprise, it fell to 8.3%. So unemployment in Europe has been falling for the fourth consecutive month, which is good news.
Unemployment rate (Europe):
Another attempt was made when the US Department of Labor released its report. First of all, everyone was impressed by the fact that for the first time since April last year, the number of new jobs created outside of agriculture had dropped. Moreover, by 140,000. The number of jobs were projected to rise by 112,000. In general, the picture is not pleasant. Nevertheless, literally half an hour later, the dollar began to strengthen again and completely won back all the previous losses of the day. This is partly due to the fact that the euro is obviously overbought. Other indicators of the state of the US labor market also contributed. For example, the unemployment rate did not rise from 6.7% to 6.8%, but remained unchanged. In addition, the growth rate of average hourly wages, instead of slowing down from 4.4% to 4.3%, accelerated to 5.1%. So the decrease in the number of jobs was not so significant as to affect the situation as a whole. And salaries are growing, which portends a further increase in consumer activity. In other words, the content of the report is not so bad. Rather, it is moderately neutral.
Number of new jobs created outside agriculture (United States):
The EURUSD pair is in the stage of correction from the local high of the medium-term upward trend, where market participants managed to strengthen their dollar positions by about 180 points. The oversoldness of the US dollar is still felt in the market, which may have a positive effect on the volume of short positions.
The market dynamics is high, which confirms the speculative mood in the market.
If we proceed from the quote's current position, we can see that downward interest prevails as soon as trading starts, which leads to a succeeding downward movement.
Considering the trading chart in general terms, the daily period, it is worth highlighting that, taking the corrective course into account, the EUR/USD quote is still at the peak of the medium-term upward trend.
We can assume that sellers still have a chance for a subsequent decline towards 1.2130, where the turning point is located, which may affect the volume of short positions. The most impressive downward trend will occur after the price settles below 1.2130, which can lead the way to 1.2060-1.2000.
From the point of view of a comprehensive indicator analysis, we see that with the submission of a corrective move, we have a sell signal on the hourly and daily periods.
