FOREX Fundamental analysis for EURUSD on March 9, 2023
The first speech of the head of the Federal Reserve System to the US Congress was hawkish. On Tuesday the rhetoric of Jerome Powell has eased and the strengthening of the dollar did not have the expected continuation despite good labor market statistics from the ADP. The report showed a growth of 242K jobs in February. This is higher than Bloomberg experts believe.
At the same time the number of vacancies was down from 11.2 to 10.8 million, which is still better than the pre-pandemic 7 million. The labor market doesn't prevent the Fed to continue its aggressive policy.
For January, U.S. exports were up 3.4% and imports were up 3%
U.S. foreign trade dynamics
At the same time, Jerome Powell twice said that the Fed has not yet made a final decision on rates. It will depend on external data, in particular, the labor market report which will be released tomorrow. That remark cooled down the buyers of the dollar, who thought the rate hike in March was a done deal.
Bloomberg Economics thinks the NFP will fall short of 200K, so the Fed will only raise rates by 25 basis points in March. At the same time, the Bloomberg consensus forecast calls for 225,000 jobs.
U.S. Employment Dynamics
Investors have been consumed by the Fed's monetary policy discussions and have stopped responding to the rather curious news from Europe. And here a scandal is brewing. The head of the Central Bank of Italy came out strongly against monetary restriction, thus supporting ECB Council member Fabio Panetta, who compared raising rates to a night race in a car with lights out.
It turns out that not all European monetarists agree with the ECB's tightening of monetary policy. But now traders are waiting for the Non-farm Payrolls release. The report can send the EURUSD to 1.04 or lift the pair to 1.07. Forex trading based on the news is risky, so those who are not used to taking high risks should delay taking positions. From the technical point of view, if the price fixes below 1.0525, we will get a new signal to enter short positions.