The EURUSD turned higher after the US released a series of mixed of weak economic data. The unemployment claims, Q1 GDP, and durable goods data disappointed.
Jobless claims rise
The EURUSD pair rose after the US released another series of weak jobless claims data. The data showed that more than 2.1 million Americans filed for unemployment claims in the previous week. Last week’s data was also revised upwards to more than 2.4 million. These numbers show that most Americans are still struggling because of the coronavirus pandemic.
Also, they show that the US has a long way to return to the weekly pre-coronavirus claims of about 200k. Meanwhile, the continuing jobless claims numbers declined to 21 million from the previous 24 million.
At the same time, I expect these numbers will start to increase as more people go back to work.
US economy contracted faster than expected
The EURUSD pair also reacted to news that the US economy contracted at a faster pace than earlier expected. Data from the statistics office showed that the economy weakened by 5.0% in the first quarter. That was a worse performance than the previous estimate of 4.8%. This decline was mostly because of the shutdown that started in March as the coronavirus illness was declared a pandemic. That led to a sharp decline in consumer spending, which represents about 67% of the total economy.
Meanwhile, durable goods also declined in April. The headline figure fell by 17.2% in April after falling by 16.6% in March. These are some of the worst figures in recent memory.
Germany inflation sinks
On the other side of the EURUSD pair, data from Europe also disappointed. In Germany, the headline consumer price index declined to 0.6% in May from the previous 0.9% on a year on year basis. The CPI fell to -0.1% on a MoM basis, bringing fears of deflation. In the same month, services and industrial sentiment declined to -43.5 and -27.5 respectively.
Download our Q2 Market Global Market Outlook
EURUSD technical forecast
The EURUSD pair is trading at 1.1025, which is the highest it has been since April 1. On the daily chart, the pair is forming a three white soldiers pattern, which is usually a bullish sign. Also, it is above the 100-day and 50-day exponential moving averages and slightly below the 50% Fibonacci retracement level. Therefore, as I wrote earlier today, I expect the pair to continue rallying as they attempt to test this retracement level.
On the flip side, a move below 1.0950 will invalidate this trend. This price is along the 100-day EMA and slightly below the 38.2% retracement.
Don’t miss a beat! Follow us on Telegram and Twitter.
More content
- Download our latest quarterly market outlook for our longer-term trade ideas.
- Follow Crispus on Twitter.
- Do you enjoy reading our updates? Become a member today and access all restricted content. It is free to join.