Greenback Remains Weak
Dmitriy Gurkovskiy | Sep 06, 2021 08:15AM ET
The major currency pair is starting a new September week with a slight correction and trading close to 1.1870. However, strategically, the USD remains weak.
The Unemployment Rate in the USA dropped to 5.2% in August, the same as expected, after being 5.4% in the previous month. The Average Hourly Earnings added 0.6% m/m after expanding by 0.4% m/m. And that was all for the good news.
The Nonfarm payrolls showed only 235K, which is significantly worse than the expected reading of 720K. The July reading was revised upwards and showed 1.053M. This was the reason why investors turned their back on the “greenback” once again.
Market players got upset: slow growth of the employment sector may result in a similar speed of the economic recovery.
In the H4 chart, after breaking 1.1840 to the upside and finishing the ascending structure with the short term target at 1.1906, EUR/USD is forming the first correctional wave to the downside with the closest target at 1.1840 and may later grow to reach 1.1875, thus forming a wide consolidation range between the two latter levels. If the price breaks this range to the upside, the market may resume trading upwards to reach 11938; if to the downside – continue the correction towards 1.1818. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line has left the histogram area at the indicator’s highs, which may hint at a correction. The line is expected to fall towards 0 and then resume growing to return to the highs.
As we can see in the H1 chart, after forming a narrow consolidation range around 1.1843 last Friday and then breaking it to the upside, EUR/USD has extended the third ascending wave to complete it at 1.1906; right now, it is correcting to return to 1.1845 and test it from above. At the moment, the pair is breaking 1.1875 and forming a downside continuation pattern. The target of the correction at 1.1850. After that, the instrument may start another growth to test 1.1875 from below and then resume falling towards 1.1843. From the technical point of view, this scenario is confirmed by the Stochastic Oscillator: after breaking 50 to the downside, its signal line is steadily moving towards 20, which indicates a further correction on the price chart.
Disclaimer:Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
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