Despite the media-driven haze surrounding the resilience of the U.S. economy, we are observing a persistent two-week trend of shift away from risk. Yesterday, the S&P 500 dropped by 1.37%, oil fell by 1.41%, the dollar rose by 0.26%, and the yield on 5-year U.S. government bonds decreased from 3.92% to 3.83%. By this morning, all these instruments had reached key support levels, particularly the bonds, which had hit an annual low (as shown on the yield chart) previously recorded in January.
Yesterday, the total number of unemployment benefits filings in the U.S. unexpectedly rose to 1.877 million, surpassing the forecast of 1.860 million. The ISM Manufacturing Employment Index for July fell from 49.3 to 43.4, compared to a forecast of 49.0. Therefore, today’s non-farm payrolls, forecasted at 176,000 versus 206,000 in June, might be weaker. The shift away from risk will continue.
On the daily chart, the euro broke through the support level of 1.0788 yesterday. The price was just 1-2 pips short of reaching the MACD line, but this is not crucial in the current situation—a break below yesterday’s low will automatically mean moving below the MACD line. This opens up the target of 1.0724—a clear low of five lows since December 2023. Breaching this level will allow for a further decline into the target range of 1.0636/50.
On the 4-hour chart, the price is consolidating at the support line of 1.0788. Progress is taking place below both indicator lines. The Marlin oscillator has slightly eased and is ready to continue its decline. We are waiting for today’s U.S. employment data.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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