The EURUSD pair cruised past an important resistance level as traders braced for a nerve-wracking initial jobless claim. The data, which will be released at 1230 GMT, by the Labour Department is expected to show the scale of the current lockdown in the United States.
Analysts expect the data to show a surge in the number of people applying for jobless claims in the US. Economists surveyed by Reuters expect the number to jump to over a million. This is an understatement, since California itself has seen more than 1 million jobless claims, according to a report in CNBC.
According to Goldman Sachs, the number of initial jobless claims could rise to as high as 2.25 million while Morgan Stanley expects the claims to jump by more than 3.4 million. Just last week, the jobless claims data rose by 281k, which was above the four-week average of 232k.
These numbers come at a time when the US economy is literally shut. Restaurant chains have been forced to close while airlines have cancelled most flights. Hotels, like Marriott and Hilton, have started to massive layoffs while cruise lines have been forced to park their ships.
US Q4 GDP to Be Released
In addition to the jobless claims, we will also receive the final reading of Q4 GDP data. While this number is important, I don’t expect it to move the markets because the macroeconomic environment has changed significantly since then.
Instead, traders are concerned about the scale of this year’s decline. Analysts have varied estimates. Goldman Sachs expects the economy to see no growth this year and to drop by more than 5% in the second quarter. Morgan Stanley expects the growth to drop by 30% in the second quarter. JP Morgan expects the economy to drop by 4% this quarter and by 14% in the coming quarter.
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EURUSD Technical Analysis
In today’s EUR/USD forecast, I will use a slightly-modified chart of what I used yesterday. On the hourly chart, I projected that the pair would hit the important resistance level of 1.0900. It did that and moved slightly higher. On the chart, you can also see that the pair has been rising after forming a double bottom at 1.0650.
In today’s chart, I have introduced the Average Directional Index (ADX), which shows that the upward trend remains strong. As such, I expect the pair to remain being bullish above the yesterday’s target. I then expect it to test the resistance of 1.1042, which is an intersection of the current channel resistance level and the 18th March high.