It is hardly surprising that yesterday the euro opened the trade with a slight rise. Earlier, the European currency depreciated considerably, so a correctional movement was predictable. However, the release of the US macroeconomic data moved the euro back to its previous levels.
Although the initial jobless claims came in a bit worse than expected, the overall figures were positive. What is more, the data on initial claims for unemployment benefits turned out to be above the forecast: their number declined by 29,000 instead of the estimated 17,000. At the same time, the continuing jobless claims are of much greater importance. Instead of the predicted 149,000, their number decreased by only 79,000. So, the overall decline in the number of claims was less than previously expected. Yet, the US labor market is still on track to recovery.
So, amid this data, an upside correction on the euro came to a standstill, yet the local correction is likely to continue. Today, as the economic calendar is almost empty, the euro may attempt to retry this correctional scenario.
US continuing jobless claims
After having tested a yearly low, the euro/dollar pair slowed down the pace of decline. Now it is important for the price to hold below the key level of 1.1700. In this case, the euro is more likely to extend its downward movement.
The RSI is located above the level of 30, indicating that the market is not oversold and the euro may drop further.
Outlook
Consolidation below the key level of 1.1700 resulted in the reduced volume of short positions on the pair. This is due to the fact that traders expect a technical correction. The pair will resume its downtrend when the price settles below the mark of 1.1600.
Comprehensive indicator analysis confirms a sell signal on the intraday and medium-term periods. As for the minor time frame, it shows a mixed buy/sell signal due to the flat movement.
InstaForex Group