This morning brought the release of April Non-Farm Payroll numbers out of the US, and while the headline number was fairly strong, the internals were questionable. The US economy added +263k jobs in the month of April, blowing by the expectation for +190k to have been added. Also in the positive column was the unemployment rate, which sunk to a fresh 50-year low, printing at 3.6% versus the expectation of 3.8%. But – the question marks around inflation in the US economy remain as Average Hourly Earnings missed expectations, coming in at an annualized 3.2% versus the expectation for 3.3%; and labor force participation also slowed, helping to buffer that attractive showing in the unemployment rate.
At this point, the net response in the US Dollar has been one of weakness. After an initial flare of strength after the release of the headline number, at which point prices in DXY pushed-up to test the weekly high at 98.10, bears have come back to re-take control of the matter.
Federal Reserve Chair Jerome Powell said on Wednesday that factors dragging on inflation might be transitory and he saw no case for a rate move in either direction. But because the Bureau of Economic Analysis reported that gross domestic product grew at an annual rate of 3.2%, substantially above the projected 2.1%, U.S. assets have received considerable inflows due to relative economic strength at home and economic weakness in the rest of the world.
So fundamentally the US dollar should continue to rise. From a technical standpoint, lets to go the charts to see why price might head next.
Monthly Chart (Curve Timeframe) - Monthly demand is at $101.50 and monthly supply is at $90.00.
Weekly Chart (Trend Timeframe) – the trend is up, but price ran into the weekly supply at $97.50 and is pulling back.
Daily Chart (Entry) – the chart suggests price is heading to $101.25.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
