The US Dollar suspended its growth against other currencies on Friday. In particular, the USD index closed the trading week with 0,4% decline around 83,97.
The US Dollar suspended its growth, thereby letting other currencies consolidate against other majors after the US Department of Labor released a week employment report for August, which was a surprise.
Still, this week, the American currency may resume its growth against other majors. The thing is that despite weak non-farm payrolls, released on Friday, other macroeconomic indicators published by US statistical agencies look reassuring and indicating economic strengths in the USA.
It should be noted that before the latest decline, the US labor market used to show consistent growth in the amount of new jobs. In August, the rate of employment slowed down to the lowest level in 2014. In particular, the amount o new jobs created (excluding the agricultural sector) declined down to 142 000 units. The data were adjusted to seasonality. According to the recent survey conducted among US households, the rate of unemployment dropped from 6,2% in July down to 6,2% in August. As for the year-to-date comparison, the rate of unemployment dropped by 1,1% from 7,2% down to 6,1%.
The average amount of new jobs created outside the agricultural sector over the last 3 months is 207 000 jobs.
Apparently, a higher pace at which the US labor market is recovering back economic recovery and higher consumer confidence, thereby triggering household income growth. Still, the US economic growth has been inconsistent and unstable so far, amid widescale employment growth.
The Fed is still keeping short-term interest rates near zero. This situation has been going on since December 2008 and is done in order to support the economy suffering from the global financial crisis triggered by the US mortgage crisis in 2008. The Fed is planning to complete the tapering of QE3 in October. At the same time, experts assume that the Fed is going to start raising the interest rates in mid 2015. Still, Janet Yellen gave us to understand that the anticipated interest rate hikes may start earlier has expected if the progress seen in the US labor market is going on at a faster-than-expected pace.
USD Index: Mid-Term Prospects
According to the comprehensive analysis of the mid-term situation in the H4 chat of the USD index conducted by expert members of Masterforex-V Academy the current situation looks as follows:
The mid-term and long-term trends are going up. They are represented by MA 55 and 233 respectively. If to take into account that the price stay resilient even after poor non-farm payrolls, the bulls are still strong and dominating the market.
The most likely mid-term scenario implies a further rally above the local high and up to 83,97 and 84,00. If the levels are broken, the next target to watch is 84,48.
Alternatively, the price may start retracing if it overcomes the level of support at 83,55. If this is the case, it may go down to 82,82.
According to the Binary Options Department of Masterforex-V Academy, it is recommended to purchase call options on USD after retracements. The estimated average lifetime of a binary option is 1,5 hours.
