EUR/USD Soft after NFPs & as Markets Monitor the Situation in Ukraine
US NFPs & Fed Rate Path
US Unemployment dropped to the lowest levels in two years in March, as Friday's data showed Unemployment at 3.6%, from 3.8% in February. Participation rate remained at pre-pandemic levels, but ticked up to 62.4%, from 62.3% in the prior month.
The headline NFPs reading revealed that the US economy added 431,000 jobs in March, which is not a bad figure, despite being significantly lower that prior month +750,000 payrolls.
Overall the report was solid and supported the aggressive market pricing for the Fed's interest rate path, with CME's FedWatch Toll showing a 50 basis point rate hike with 69.4% probabilities for the next policy meeting in May, at the time of writing. [1]
The Jobs report came two days after the central bank's preferred measure of inflation had surged to the highest level since April 1983. This is the Core Personal Consumption Expenditures (PCE), which stood at 5.4% in March.
High inflation is the Fed's main driver at this stage, having forced officials to raise interest rates last month, for the first time since 2018.
Ukraine Situation
Ukrainian President Zelenskyy accused Russia of committing "genocide" and of the "elimination of the whole nation and the people", in a CBS Face the Nation interview on Sunday. [2]
When asked about the "horrific images and reports from Bucha" on CNN's State of the Union, US Secretary of State Blinken said that this these are "a punch to the gut", adding that "Since the aggression, we've come out and said that we believe that Russian forces have committed war crimes and we've been working to document that". [3]
Russia denied the accusations, saying that "All the photos and videos published by the Kiev regime in Bucha are just another provocation". [4]
Today, French President Macron judged that there very clear indications of war crimes in Ukraine and talked of new sanctions against Russia, in an interview on France Inter radio [5]. Mr Macron is up for re-election this week, since the first round of the French Presidential elections is held on Sunday.
EUR/USD Analysis
The pair had gained last week on hopes of a peaceful solution from the Russia-Ukraine negotiations, but dropped on Friday and faces difficulties today, as sentiment sours at the start of the European session from talk of potential new sanctions.
The technical outlook has not changed much as last week's rejection of the EMA200 (black line) keeps risk on the downside and the EUR/USD vulnerable to 1.0943, although the year's lows (1.0805) continue to be distant.
Despite the renewed pressure, the common currency comes from a positive week and shows resilience. As such, it has the ability to push for a return above the EMA200 (at around 1.1100), but we remain cautious about further upside towards 1.1233.
Nikos Tzabouras
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
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