Overnight some of the major US long and short-dated bond yields have inverted, repeatedly flashing a recession signal. However, investors have not been convinced just yet as the recent economic data is still looking strong.
The US conference board consumer index, final quarter GDP, and Chicago PMI all suggest the economy is maintaining its current momentum, despite climbing inflation weighing on future growth. The consensus for today's US non-farm payrolls is calling for 490,000 new jobs have been added in March, and a further contraction of the unemployment rate to 3.7%.
Since ongoing strong job data is already widely expected, so the number may not have a major impact on the broader markets. But the tightening labor market will secure the US Federal Reserve’s confidence for its pledge to pin down inflation by accelerating rate hikes and quantitative tightening monetary measures, in turn pressuring on the stocks markets.
As per yesterday’s narratives for a potential funds’ rotation into the US long-dated bond markets, the USD is most likely to be weakening against its peers coming into the new month. And the stock market may slow its rally, but the upcoming earnings season will also weigh on sentiment.
EUR/USD- Daily chart
Key technical elements
- Stochastic is on the rise, providing an ongoing upside momentum may continue, but at the same time a potential imminent pullback opportunity may occur
- MACD is on the course of a bottom reversal since 8 March, the uptrend is still intact.
- A potential bullish break-out on the long-term descending trendline may occur.
Key price levels
Supports: 1.1058, 1.1000
Resistances: 1.1142, 1.1239