After yesterday’s surge, the common European currency stood still, awaiting jobs data from the United States. In the meantime, the pound sterling managed to gain ground further. The trading week is coming to an end and it is time to make a preliminary assessment. The pair’s upward trend that inspired market participants, has turned into an inertial motion. Its scale was similar to that of the period from February 21. However, the previous day marked a decisive end to this rally.
According to the current trading chart, it can be seen that the price is moving within the range of 1.1350, the level of yesterday’s high. The overbought market leads to an unstable structure of the pair’s inertial movement. Therefore, after descending below 1.1300, the price is likely to reach the level of 1.1180.
At the same time, risk appetite remains high. Thus, another upward movement cannot be ruled out if the pair breaks through the level of 1.1400 while moving towards the area of 1.1440-1.1500.
As for the pound/dollar pair, the price gained ground and went beyond the upper border of its previous sideways trend formed between the levels of 1.2150/ /1.2350/ /1.2620. For the first time in a long time, the price touched the 1.2688 mark but failed to stay firmly on the four-hour chart.
So, traders continue to buy the pair near the level of 1.2620, where many overheated long positions can be seen. This is why the pair is highly likely to correct downwards in the nearest future.
The price may continue to fluctuate between 1.2580 and 1.2670 for some time and then pick a trajectory. As for trading recommendations, the pair may change the trajectory if it fixes higher than 1.2670 on the H4-chart. Then, it should break through the level around 1.2770, which will indicate a breakdown of the flat formation. The situation is a bit simpler with short positions thanks to the main trend. They can be opened if the pair consolidates lower than 1.2570 and sinks to 1.2500.
Today market participants are anticipating the Labor Department’s jobs report. The US dollar is likely to lose ground if the report is negative. In addition, the unemployment rate, which is currently at a historical high of 14.7%, could rise as much as 19.5%. Some economists reckon it may rise even higher. In this case, the situation in the labor market will turn into a nightmare for the US. The jobless rate has already been compared with the one that occurred in the Great Depression. Although this is not quite correct since economists started collecting the data on the labor market only after the Great Depression. This is why there is no reliable data on the unemployment rate during the Great Depression. Yet, the current jobless rate has reached an unprecedented level. Some analysts fear that it may hit new highs.
That’s all for now. Do not miss our next video on the Labor Department’s jobs report on InstaForex Channel. See you again in a couple of hours!
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