Today marks one of the key days in shaping the medium- and long-term directions of currency rates in the market with the release of employment data in the US. Federal Reserve Chair Jerome Powell's statement about shifting attention to employment has heightened investor nervousness to the highest level in the last year and a half. This nervousness is quantitatively measured by volatility options, which traders have surrounded themselves with in the largest volumes over the last 18 months, and the S&P 500 VIX index, which jumped 33% over the week. Also, the yield on 5-year US Treasury bonds dropped from 3.65% to 3.53% in a week, indicating investors are moving away from risk. And all this with a large volume of long positions on the euro remaining on the market. Earlier, we said that if the big players wish to turn the market towards a global strengthening of the dollar, employment data provides a convenient pretext, especially amid accumulated euro purchases amid the frenzy of a double Fed rate cut. Historically, it has been the case that employment data published by the Department of Labor, if needed to influence the market, do not reflect reality and are only adjusted to a balanced state after 1-2 months.
Despite yesterday's weak ADP data showing a job increase of 99,000 versus the forecasted 144,000, we expect good results from the nonfarm payrolls and unemployment rate (forecasted at 4.2% versus 4.3% in July). We base this on the indicator of the total number of people receiving unemployment benefits, which has decreased over the last five weeks from 1.875 million to 1.838 million. The daily chart shows that the price consolidated above the support level at 1.1085. Given today's volatility, the price could easily surpass the target level of 1.1140 and move towards 1.1010. The Marlin oscillator, which has already started a downward reversal, suggests such a scenario.
The 4-hour chart shows a shift in short-term interest toward buying, as the price has moved above the balance line but has yet to consolidate above the MACD line and the target level of 1.1140. We are waiting for the release of the US labor data.
