Dollar supported by employment data; EUR / CHF, the euro remains fragile

Key points of the article:

  • Euro down slightly due to the conflict in Ukraine, dollar up after work
  • EUR / CHF: strong support at 1.0200

Prejudice

Resistence

Support

Note

AUD / JPY

bullish

97.3

84.54

AUD / USD

bullish

0.755

0.7245

Resistance test

EUR / AUD

bearish

1.5357

1.4535

EUR / CHF

Neutral

1.0402

0.978

Intermediate Support 1.0194

EUR / GBP

Neutral

0.854

0.8296

Bearish slant in resistance

EUR / JPY

bullish

137.5

133.2

EUR / USD

Neutral

1.123

1.0766

GBP / JPY

bullish

164.2

158.22

GBP / USD

bearish

1.33

1.3

NZD / USD

bullish

0.7219

0.6868

USD / CHF

Neutral

0.9472

0.915

USD / CAD

Neutral

1.2957

1.245

Bounce on the support

USD / JPY

bullish

125.85

116.36

Euro down slightly due to the conflict in Ukraine, dollar up after work

The dollar recorded moderate gains on Friday, after the strength of the US March employment report reinforced expectations of a 50bp hike in interest rates by the Fed at its next FOMC meeting in May. Additionally, the hike in T-note yields on Friday strengthened the dollar’s interest rate differentials with the major currencies.

US economic data on Friday was mixed for the dollar. On the positive side, the US unemployment rate in March fell 0.2 to a two-year low of 3.6%, showing a stronger-than-expected job market of 3.7%. In addition, average hourly wages increased 5.6% yoy in March, beating the forecast of 5.5% yoy and representing the largest increase in 22 months. On the downside, non-farm payslips rose +431,000 in March, weaker than expectations of +490,000, although February payslips were revised up to +750,000 from previously reported +678,000. In addition, the March ISM manufacturing index unexpectedly fell 1.5 to its lowest level in a year and a half at 57.1, weaker than expectations for a rise to 59.0.

EUR / USD fell on Friday due to weaker-than-expected economic data in the Eurozone and concerns over inflation. The March S&P Global Eurozone Manufacturing Index was revised down from -0.5 to 56.5, the lowest level in the last 14 months, from previously reported 57.0. Elsewhere, Eurozone March CPI posted a record 7.5% YoY rise, beating the 6.7% YoY forecast.

Furthermore, the lack of progress in the peace talks between Russia and Ukraine weighed on the euro. Germany said on Sunday that the West would agree to impose new sanctions on Russia in the coming days after Ukraine accused Russian forces of war crimes. There seems to be the momentum to at least discuss an embargo on energy imports, which would likely come at a painful price as Russia supplies around 40% of Europe’s gas needs. Negative war news or another rise in energy prices could keep the pressure on the euro.

Comments from ECB chief economist Lane also weighed on the euro on Friday when he said: “If the outlook for medium-term inflation holds, the ECB will consider ending asset purchases in the third quarter. However, if the outlook deteriorates to the point of weakening the inflation outlook, it will have to be reconsidered. “

USD / JPY saw a moderate rise on Friday. A jump in T-note yields on Friday weighed on the yen and pushed USD / JPY higher, and a decline in Japanese business confidence put pressure on the yen. Production conditions for Tankan Large in Japan in the first quarter fell from -3 to 14, the first deterioration since the second quarter of 2020.

EUR / CHF: strong support at 1.0200

EUR / CHF is in a neutral zone above 1.0200 and below 1.0402 which is however part of a medium-term bearish trend.

A break of the support line at 1.0200 would relaunch the medium-term bearish momentum with a possible return to parity. Prices also fell below the short-term moving averages, giving signs of fragility.

A bullish candle in contact with the support zone could send prices back to test the upper limit. A break above 1.0400 could lead the pair back towards the 200-period moving average currently at 1.0579.

Evolution of the euro against the Swiss franc in daily data:

Forex Morning Meeting: Dollar Supported by Employment Data;  EUR / CHF, the euro remains fragile

Twitter @CDamestoy

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