The economic calendar of the past day had rather imaginary statistics for Europe, which ultimately supported the euro. But is it worth it to rejoice?
Details of the economic calendar for April 1
The latest data on Markit Manufacturing Purchasing Managers' Index in the eurozone was published, which, instead of maintaining the level of 62.4 points, grew by one-tenth and amounted to 62.5 points in March.
In simple words
This indicator is published by Markit Economics, which tracks the activity of purchasing managers in the manufacturing sector and reflects the changing business conditions in the industry. The index is considered an important economic indicator of the state of the Eurozone economy as a whole. The growth of the index is a positive factor for the national currency.
This situation with the publication of the index resonates with the fact that Europe is still drowning in restrictive measures related to the coronavirus, and given the latest news that France is leaving for another four-week lockdown starting April 3, frightens most investors. Taking into account such a negative information flow, the growth of the euro can be regarded as a speculative interest without any foundation.
An important impetus for speculators was the publication of data on the number of registered cars in France in March, where they record a simply staggering 191.4% growth, but it is worth recalling again that this change is associated only with local relaxation in restrictive measures since taking into account the new lockdown everything will fall into place and there will be a recession again.
A similar index was published in Britain and the United States, where there was an increase, but the market followed in a speculative mood.
UK - Manufacturing PMI rose from 55.1 to 58.9 in March.
United States - Manufacturing PMI for March rose from 58.6 to 59.1.
During the American trading session, not only the business activity index was published, but also the data on the labor market in the US, where instead of a decrease in the number of applications for unemployment benefits, they saw an increase.
Definition
The application rate reflects the number of citizens who are not currently working and receiving unemployment benefits. This indicator reflects the state of the labor market, where the growth of the indicator negatively affects the level of consumption and economic growth.
In simple words:
An increase in the number of applications leads to a weakening of the national currency.
A decrease in the number of applications leads to an increase in the national currency.
Details:
The volume of initial applications for benefits increased from 658,000 to 719,000.
The volume of continuing claims decreased from 3.840 million to 3.794 million with an expectation of 3.775 million.
Analysis of trading charts from April 1
The DXY dollar index, as expected, entered the stage of stagnation-retracement, as indicated by the Doji candlestick pattern from March 31.
Definition of the Doji candle.
The Doji candlestick pattern is a candlestick on a trading chart, in which the opening and closing prices coincide or almost coincide, which is why the candlestick body is very small or absent, and very large in the shadows on the sides.
This candlestick pattern reflects the indecision of traders and can signal a reversal of the quotes.
If we take into account the fact of the upward movement in the index over a period of several months, then, in this case, the Doji candlestick pattern is unlikely to become a reversal, but it can serve as a regrouping of trading forces, which will lead to a rollback.
The Euro/Dollar currency pair, after a short walk within the base of the downward movement, managed to return to the boundaries of the previously passed sideways range of 1.1760/1.1805, forming a new stagnation inside it.
The Pound/Dollar currency pair, following an upward trajectory, from the variable pivot point 1.3669 formed an amplitude in the boundaries of 1.3705 and 1.3845, where traders work both on the principle of a rebound from one or another border, and consider the breakout method in their strategy.
Trade recommendation - Euro/Dollar and Pound/Dollar on April 2
Today, in terms of the economic calendar, we have one of the most important events in fundamental analysis, the publication of the report from the US Department of Labor.
It is worth grasping the simple point - the labor market is considered one of the most important indicators of the state of the economy, at the same time it determines the prospects for its further development.
This news in the vastness of the economic calendar always focuses on itself the special attention of market participants.
Expectations for the report:
The country's unemployment rate could drop from 6.2% to 6.0%, which can be considered an excellent example of the recovery of the labor market after the coronavirus crisis.
The number of new jobs, excluding agriculture, may be 647,000 in March, against 379,000 in the previous reporting period.
The indicators are good, and they can give impetus to the growth of the US dollar.
Against all this promising backdrop, we are faced with a day off in Europe, Britain, and the United States, where Good Friday is observed today.
Thus, the report of the US Department of Labor, which will be published today, will play out on the market as early as Monday, April 5, because there will be a shortage of traders on the market.
Analyzing the current trading chart of the Euro/Dollar, you can see a very narrow price fluctuation within the boundaries of 1.1769/1.1783 since the trading volumes have already been reduced and there is no one to trade in the market for nothing. The amplitude may well expand to the boundaries of 1.1760/1.1805, but, as I wrote above, the main changes in the market are likely to be expected from the beginning of the new week.
Given the preparation, it is possible to consider keeping the price outside one or another border of 1.1760/1.1805, which will later indicate the further path of speculators.
Analyzing the current Pound/Dollar trading chart, you can see that the quotes came to a local maximum from March 29, where, on a natural basis, there was a decrease in the volume of long positions * (buy positions *) and, as a result, a stop. In case of a repetition of the logical basis of the past associated with the 1.3850 area, we can assume that we will face a rebound in the opposite direction 1.3850 ---> 1.1760-1.1705.
As an alternative scenario for the development of the quotes, traders will also consider a breakdown of the upper limit of 1.3850, but in this case, it is necessary to keep the price above this value on the daily period.
