EUR/USD Forecast: Three reasons for the bounce and why it may not last
Our preference: long positions above 1.1123 with targets at 1.1170 & 1.1221 in extension.Alternative scenario: below 1.1123 look for further Downside with 1.1101 & 1.1080as targets.
EUR/USD has been rising after the US published weak jobs figures.
Optimism about trade is weighing on the safe-haven greenback.
The currency pair has escaped crashing below the uptrend support line.
Has the world’s most popular currency pair bottomed out?
While the common currency is enjoying the misery of the dollar,
it has weak foundations to lean on.
Here are the reasons for the bounce:
1) Weak US Non-Farm Payrolls
The US economy gained only 145,000 jobs in December, worse than 164,000 that appeared on the calendar – and also below higher “whisper numbers. for the Non-Farm Payrolls. Estimates had been revised to the upside ahead of the publication. Moreover, the labor market’s
gains in 2019 were the worst since 2011.
Also, wage growth disappointed with 0.1% monthly and 2.9% yearly,
showing that inflation – which the Federal Reserve also targets – is unlikely topick up anytime soon.
2) Trade hopes
Liu He, China’s Vice Premier, is heading to Washington to sign Phase One of the trade deal. Ahead of the ceremony, the world’s largest economies expressed optimism – and the upbeat tone weighs on the safe-haven dollar.
Steven Mnuchin, the US Treasury Secretary, suggested that both countries should restart their strategic dialog. This mechanism for defusing tensions was last in use by President George W. Bush in 2006