The EUR/USD cross at the moment is experimenting an important rebound from a significant support at 1,1102/1,1058 during Friday after disappointing NFP data. With the pair which is trading at the moment at 1,1340 tracing a negative performance of 0,23%, we can see the next significant resistance at 1,1420 (exactly the center of the channel from here and the April 2016 high at 1,1495). On the negative side, in case the loss will extend, the next support is seen at 1,1216 (25 April low) after which the pair could go next to the 200-day moving average at 1,1102.
With a decreased occupation to 1,7% YoY (which would increase the Q2 productivity data), also the unemployment rate has decreased compatibly with the downside move of the labour force. The initial part of the year, moreover, have seen the participation rate increase, with a lower number of people leaving the labour force, and the GDP which is still on track for the 2% level in Q2 (even if it seems to have lost the initial momentum). Besides those disappointing data, the major concern is the revision of the expectations for the labour market: this will certainly cause a Fed’s reaction, which seems to have removed from the table the possibility of an hike for the current month.
Yellen this afternoon’s speech will be pretty balanced, after the lately cautiousness seen in topic of monetary policy. I’m waiting for a rhetoric against a rate hike for the near term, but, as often happens, the Fed’s chair could repeat that
“a rate hike during next months would be appropriate”
This could mean a reinforcement of the vision by which the Fed could intervene in September, with a more clear situation of growth, inflation, labour market and global risk.