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German Jobs helps but missed CPI weakens EUR

Market Analysis

EURUSD, Daily            

German jobless rate falls to record low. Seasonally adjusted data dropped 30K over the month, much more than expected, bringing the official unemployment rate down to a record low of 5.8%. The very strong labour market ties in with improving confidence data and highlights the upside risks to Q1 GDP growth, as private consumption continues to underpin the recovery. And while inflation may have fallen back again March, the data indicates that the risk of second round inflation effects is higher in Germany than elsewhere, although many will like to see above average wages growth, hoping that the loss in German competitiveness will reduce downward wage pressures elsewhere.

The Euro immediately perked up on the jobs news as EURUSD touched 1.0695 but could not breach 1.0700. The weaker Eurozone inflation figure (1.5%) when 1.8% was expected was not a real surprise following yesterday’s weaker German and Spanish inflation numbers. The ECB has vowed to see through month to month volatility, so the drop back in the headline rate will not change the rate outlook, with officials eyeing exit measures for 2018. EURUSD currently tares at 1.0680.

On Wednesday I took short positions on four euro crosses – (EURUSD, EURCAD, EURAUD and EURNZD) all on the close of the daily candle. All present a similar pattern of recent tops, breaks of key moving averages and exhaustion of buying.  Initial targets are around key Fibonacci retracement levels and the 14 day ATR zones.

 EURUSD and EURCAD both came within a few pips of Target 1 on yesterdays close.

Asset Entry Target 1 Target 2 Stop Loss
EURUSD 1.0764 1.0670 1.0605 1.0915
EURAUD 1.4033 1.3870 1.3806 1.4312
EURNZD 1.5308 1.5134 1.4976 1.5500
EURCAD 1.4343 1.4196 1.4076 1.4605
         

2017-03-31_13-23-15

2017-03-31_13-30-08

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Stuart Cowell

Senior Market Analyst

HotForex

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