The EURUSD pair declined after the Labour Department released disastrous jobless claims data. The numbers showed that more than 6.6 million Americans filed for unemployment insurance protection in the previous week. This brought the March initial jobless claims to more than 10 million, which is the worst number ever recorded.
US Nonfarm Employment Numbers Eyed
Today, the focus on the pair will be the official employment numbers, which will be released at 12:30 pm GMT. Expectations are already low considering that very few companies hired people in March. According to Bloomberg, the nonfarm employment number could decline by more than 100k in March.
The unemployment rate could increase to 3.8% from the previous 3.5% while the participation rate is expected to move lower. The number of hours worked too could decline since most people are now working from home.
These numbers paint a situation where the US economy is collapsing. Many small businesses are expected to file for bankruptcy in the coming months, even with the government stimulus package that was passed a week ago. This in turn could affect bank earnings, which will start coming in the next few months.
Why US Dollar Rose After Bad Employment Data
What surprised many participants is that the US dollar rose after the relatively strong jobless claims data. Why? The reason is that the bad numbers were already priced-in by the market. Another reason is that investors expect other countries to be worse-off compared to the United States.
The EUR/USD pair traded as I had predicted in yesterday’s report. My point was that the pair had formed a head and shoulder’s pattern and that the Elliot Wave analysis pointed to a lower trend. On the four-hour chart, the pair shows that it is continued to decline. At the same time, the shorter and medium-term moving average have made a crossover. This means that the pair may continue declining ahead of the NFP data.