US Employment Data in the Spotlight as Fed Decision Looms

• The US Dollar Index rises to its highest level in 20 days and breaks above its recent price range.
• The market turns its attention to tomorrow tonight’s Federal Reserve Press Conference. Investors will be monitoring any indications of rate cuts for September.
• Analysts again expect the consumer confidence to drop below the 100 level, but investors are more concerned about lower job openings.
• McDonald’s stocks rise as the company confirms a new meal plan to target lower-income consumers. Company earnings miss expectations.

EURUSD – Will US Data Prompt A Dovish Fed?

The EURUSD exchange rate is likely to witness high volatility throughout the day as Germany and Spain are due to release their latest inflation data. In addition to this, the US will release the CB Consumer Confidence Index and JOLTS Job Openings. The US Dollar Index is currently trading 0.13% higher and is rising for a second consecutive day. The Euro Index is currently unchanged and struggled on Monday.

The value of the US Dollar is likely to continue to be influenced by the timing and frequency of interest rate adjustments. As a result, the Chairman’s press conference will play a significant role. The Federal Reserve will not change its Fund Rate, but investors believe the Chairman, Jerome Powell, will provide concrete indications for a September and December cut. If Mr Powell is deemed dovish and points towards 2 rate cuts, the US Dollar can potentially come under pressure.

The downward pressure can gain momentum today, before tomorrow’s Federal Reserve Statement and Press Conference. If today’s JOLTS Job Opening reads lower than expectations (8.02 million), it would be the lowest seen since April 2021. This would fall in line with previous guidance regarding lower economic growth in the second half of 2024. As a result, the Dollar can witness pressure and the Fed may become more dovish.

The Euro on the other hand will depend largely on the German inflation data. So far, Spain has released their inflation figures which showed that Spanish inflation fell from 3.4% to 2.8% and below the previous expectation of 3.00%. The release has put some pressure on the exchange rate, but not lasting downward pressure. If German inflation also reads lower, the Euro can witness a potential stronger selloff.

The value of the EURUSD remains below the trend line, sentiment line and the neutral on the RSI. In addition to this, the asset trades in the lower band of the Bollinger Bands. However, after yesterday’s quick decline the exchange rate has retraced back upwards. Therefore, investors will be monitoring when the asset regains bearish momentum. If upward momentum gains momentum, the trend-line points towards a target at 1.08495 or 1.08420.

USA500 – Will The Price Break The Ascending Triangle Pattern?

The SNP500 forms an ascending triangle pattern which is known to indicate bullish price movement, but only if the price can form a clear breakout. The resistance level at $5,499.12 is key for this as it has triggered a decline on 4 occasions over the past 4 trading days. In addition to this, the level falls in line with the 75-Period EMA and 100-Period SMA.

McDonald’s released their quarterly earnings report on Monday. The company’s earnings fell 3% lower than expectations while revenue was 2% lower. However, the stock still rose by almost 4.00% as the company said a new $5 meal plan will start to entice lower income consumers.

Michalis Efthymiou

Market Analyst

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