US Positive data shocks

Friday’s report had surged high with NFP adding two hundred and ninety five thousand jobs which shook the markets beating expectations. In spite of bad weather, the results were much higher than expected. The strength of the U.S dollar gave a whopping blow to all of its other peers. This has put the interest rate hike back on the driver’s seat, growing expectations that there is no reason for the FED to further push the hike, and the UE rate has also declined to 5.5% hitting FOMC’s target, this being the first time we see this rate since the FC.  

We expect that US will be the first to raise its IR in 2015 as we believe the word patience could be replaced with another word in this month’s statement. As we know the current long positions on USD are quite long, yet the traders are finding it hard to short USD. We will go by the trend and as long as we don’t find any reversal signals, we will not short the currency.

As we go for the Euros, the pair fell so low breaking beyond a point of 11 year, it also broke the 1K integer level at 1.1 with no difficulty. The next target is set for 2003 September low.

This is a 9th straight month of low lines in EURUSD with a 3000 pips decline since last year. Week after week the downside has been experiencing a lot of new recruits even after reaching over sold territories. Ever since August, the RSI strength meter is pointing oversold on the weekly pair, and it rose only once to fall behind lines.

The economic imbalance will continue to favor the dollar against Euros, and it is more likely for the FED to increase the interest rate. US economy has been growing strong for the last two years and we expect it to continue through this year. We decide to stay long on the USD and favor the downside with Euros.

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