Employers in the US are expected to add jobs for the second time in more than two years as payrolls are forecasted to accelerate 185K, marking the largest increase in three years. Meanwhile, the third reading for the annualized GDP report showed that the output of goods and services produced by labor and property located in the region increased 5.6% in the fourth quarter, while consumer confidence in March exceeded economists’ expectations as the gloom for job prospects tapered off.
Furthermore, durable goods orders in February advanced for a third month, with the reading climbing 0.5%, an indication that manufacturing will fuel the economic recovery as home sales continue to deteriorate. Indeed, paired with the recent improved outlook for US, an enhanced labor report could set the stage to trade the greenback as the economy recovers from the worst recession since the Great Depression, with an improved report dismissing any doubts about the sustainability of the recovery.
Thus, if employment is released in line with, or exceeding, the expectations, it would validate our bearish EUR/USD technical outlook.
Technical Outlook
EUR/USD
Click to Enlarge - Charts prepared by Michael Wright
Currently, the pair looks to test the upper trend line of the descending channel that has held since early December. Indeed, technical studies point further declines in the euro towards 1.3000, with gains likely to be capped around 1.35600.
By Michael Wright of DailyFX.com
DailyFX provides forex news on the economic reports and political events that influence the currency market.
