Non-Farm Employment Overshoots Again. CPI Coming Up

EUR/USD Drifts on the 50 MA. Where to Next?

Friday’s data revealed that U.S. job growth significantly exceeded March expectations, and wages grew steadily, indicating a strong economy at the end of the first quarter. The actual number of new jobs was 303K, far above the forecast of 212K.

A healthy job market suggests that the economy is not heading towards a recession but on the other hand, the Fed is more likely to keep rates higher for longer. Market expectations for a Fed rate cut in June have decreased to 48% from 60%, with July now appearing more likely for the start of rate reductions, as per the CME FedWatch tool.

Attention this week turns to the U.S. CPI report, expected to reveal a slight slowdown in core inflation for March. If the next two months’ inflation goes down, a June rate cut may still be on the table.

Economic Calendar Highlights

The U.S. CPI report is set to come out Wednesday at 12:30 pm GMT. Core inflation is expected to go down to 3.7% from the previous 3.8% (year over year), while the monthly figure is expected to drop to 0.3% from the previous 0.4%. Later in the day, at 6:00 pm GMT, the FOMC will release the Minutes of their latest meeting, offering insights into the reasons that determined the latest rate vote.

Thursday at 12:15 pm GMT, the ECB will announce the interest rate and unless there’s a major surprise, it will remain unchanged at 4.50%. At 12:45 pm GMT, ECB President Christine Lagarde will hold a press conference.

The last notable event of the week is scheduled for Friday at 2:00 pm GMT: the Prelim UoM Consumer Sentiment. High levels of consumer confidence lead to more consumer spending, which is an important part of the overall economic activity.

Technical Outlook – EUR/USD

The pair is currently drifting at 1.0830 after an interesting end of last week. Thursday’s and Friday’s candles are both lacking their bodies almost completely and have extremely long wicks, both on different sides.

Thursday the Euro advanced higher but it was all nullified by the Dollar and Friday the exact opposite thing happened. What’s more interesting is that all this price action occurred right on the 50-day Moving Average, which shows a huge amount of indecision.

The first two days of the week lack any notable economic releases, so we may see a period of sideways movement. This will change on Wednesday with the release of the U.S. inflation data and on Thursday with the ECB rate announcement. Those days will probably decide the next medium-term direction.