EUR/USD: The upcoming Non-Farm Employment Change report will set the direction of the euro. Fed minutes once again expresses

Good macroeconomic reports on the US economy continue to fuel the risk appetite of traders. However, it is important to understand that expecting a major turn in the markets is wrong, as it's still too early to be confident about it. The bulls have to keep the quotes at the lows of last week, because if there is no further bullish momentum in the charts, the pair will quickly return in the hands of euro sellers.analytics5efd80f8767cf.jpg

Yesterday, the Federal Reserve published the minutes for it's June meeting, the contents of which one again expressed that traders should not count on a very quick recovery of the US economy. It is clear that the country needs strong support from the central bank's monetary policy, so tools such as interest rates will remain at a zero level for a fairly long period of time. However, there are gaps already with regards to the need of charting a clear course for interest rates and asset purchases. Thus, the Fed is contemplating on when the current monetary policy will be corrected. Leaders of local banks are also concerned about the impact of soft policy on financial stability.

Control over the yield curve was also discussed, in connection with which it was decided that this issue will be studied to a greater extent. At the moment, short-term US bonds have a higher yield than long-term ones, even though from a fundamental point of view, this is a wrong phenomenon since longer securities have always had a higher yield than short-term bonds and bills.

Another issue that was also paid attention to was the full restoration of the labor market, which will take some time since there are uncertainties and significant risks for the economy in the future.

Meanwhile, good macroeconomic statistics continue to come out on the US economy. The report published by the ISM revealed that activity in the US manufacturing sector continues to record a slower decline in the indicator for June, mainly due to the resumption of work amid the weakening of quarantine restrictions in the country. Thus, according to the data, the final PMI for the US manufacturing sector was 49.8 points in June, almost reaching 50 points. Economists expected the figure to just be 49.7 points.

Good indicators were also recorded in the eurozone, which generally had a positive impact on the European currency. According to the ISM, the PMI for the EU manufacturing sector rose to 52.6 points in June against 43.1 points in May, mainly due to an increase in orders.


The gradual stabilization on the number of jobs in the US private sector also pleased traders. According to the report published by the ADP and Moody's Analytics, jobs increased by 2.37 million in June, but the pace of hiring slowed down a bit. Economists expected the figure to be 2.5 million. As for the pace of hiring, 3.07 million jobs were created in May, up from the records earlier which was down by 2.76 million.

Today, latest news on the US labor market will be published, the figures of which will have significant effects on the markets.


These reports are expected to signal the further restoration of the labor market, which recovered in June this year due to the resumption of activities of various companies. However, optimism can still be damaged if there comes another surge in coronavirus incidence in the county.

Meanwhile, the National Federation of Independent Businesses published another report yesterday which indicated a weakening labor market in US small businesses in June. According to data, small enterprises reduced 0.28 jobs in June, higher than the figure recorded in May. The main reason for this downsizing is the completion of protection programs that US authorities provided during the height of the pandemic. As noted in the report, loans that were received by many small business owners back in April are ending, and new ones cannot be obtained, which will likely lead to a reduction in the number of employees.

As for the current technical picture of the EUR / USD pair, if the quotes break out of the level 1.1290, the pair will rise to the areas 1.1350 and 1.1390. However, if the data on the US labor market turns out to be weak, signaling a slowdown in recovery, pressure on risky assets may return, in which a break of support level 1.1240 will surely bring the quotes to 1.1190. A breakout of which will open the way for the bears to push the EUR / USD pair to the lows of 1.1150 and 1.1105.

The material has been provided by InstaForex Company -