On Friday the 8th of May, trading on the EURUSD pair closed up by 3 pips. The pair rose to 1.0876 during the US session as the rise on the stock market quelled the market’s appetite for safe havens. Stocks rose following the US labour market report, which wasn’t as bad as expected, and the continued negotiations between the US and China showed signs of reduced tensions between the two countries.
The US Labor Department reported that the economy lost 20.5 million jobs outside the agricultural sector in April, while the unemployment rate rose to 14.7%. Economists expected 22 million job cuts and for unemployment to hit 16%. February’s figures were revised downwards from 275k to 230k, while March’s were revised from -701k to -870k. This marks an aggregate revision of -214k.
On Friday, the pair rose to 1.0876. Since this was the last trading day of the week, we got a downwards correction ahead of the weekend. From the low of 1.0766 to 1.0876, we now have a three-wave structure. This is a potential signal that a flat awaits us. Considering that the bears erased the gains made by the bulls before the day was out, there’s now an increased risk of returning to 1.0805.
Before the recovery, we got a double bullish divergence model. This should see a bounce to 1.0926. If we assume that we’re going to get a flat, then this is the model via which it will happen. Moreover, the 135th degree runs through 1.0922, which is strengthening the 1.0926 resistance.
Today’s economic calendar is empty. If the pair keeps trading above the balance line (1.0827), then this will be even better for the bulls. In this case, our target for the euro will be even higher.
Keep an eye on the SP500 futures. This will give us an indicator of sentiment towards risky assets. It’s currently trading 0.13% up. The bulls have erased their morning gains.