US dollar retreats after the weak non-farm payrolls data
The euro declined against the dollar and sterling after the relatively weak EU retail sales numbers. According to Eurostat, the headline retail sales declined by 3.1% in April after rising by 3.3% in the previous month. This decline was sharper than the median estimate of 1,2%. On an annualised basis, the retail sales rose by 23.3%, which was lower than the median estimate of 25.5%. The sharp increase was because the sales declined sharply in April last year at the start of the pandemic. Also, the recent lockdowns in some countries affected consumer spending.
The Japanese yen declined slightly against the US dollar even after the relatively positive economic data from the country. According to the statistics agency, the overall household spending increased by 0.1% in April after rising by 7.2% in the previous month. This increase was better than the expected decline of 2.2%. The increase led to a 13% year-on-year increase. In general, the Japanese economy has done relatively well, with the unemployment rate remaining below 3%. The country’s manufacturers are also seeing robust demand, as evidenced by the recent strong PMI data.
The US dollar held steady after the US published the relatively weak non-farm payrolls data. According to the Bureau of Labour Statistics, the country’s nonfarm payrolls increased by 559,000 in May after rising by 266,000 in the previous month. The unemployment rate declined from 6.1% in April to 5.8% while the participation rate increased to 61.8%. These numbers are pointers to the fact that the economy is adding fewer jobs than expected. Therefore, while the unemployment rate fell, the weak additions will give the Fed cover to keep its monetary policy intact.
The EURGBP pair declined to a low of 0.8575, which was the lowest level since May 18. On the four-hour chart, the pair moved below the neckline of the head and shoulders pattern. It has also moved below the 50% Fibonacci retracement level and the 25-day moving average while the Relative Strength Index (RSI) has dropped to 38. Therefore, the pair may keep falling as bears target the next key support level at 0.8560.
The EURUSD declined before the latest non-farm employment numbers. It then bounced back shortly after the numbers were released. On the four-hour chart, the pair moved above the 23.6% Fibonacci retracement level. It also moved below the Ichimoku cloud and the neckline of the double-top pattern at 1.2133. The pair also dropped below the 25-day moving average while the Relative Strength Index (RSI) has moved to the oversold level. Therefore, the pair will likely keep falling as bears target the 38.2% retracement level at 1.2050.
The USDCHF pair rose slightly to 0.9045 after the weak US jobs data. On the four-hour chart, the pair moved above the important resistance level at 0.9028, which was the highest level on May 28. It has also moved above the 25-day and 15-day moving averages while the signal and histogram of the MACD have continued to rise, Therefore, the pair will likely keep rising, with the next key level to watch being at 0.9100.