US Initial Jobless Claims Overview
Thursday’s US economic docket highlights the usual Initial Weekly Jobless Claims, scheduled for release at 12:30 GMT. The number of people claiming unemployment-related benefits is expected to drop to 730K during the week ended March 19, down from the previous week’s 770K. Continuing Claims are expected to fall further to 4.043 million from 4.124 million previously. Despite some improvement, this would still reflect a weak labor market compared to the pre-pandemic conditions.
As Joseph Trevisani, Senior Analyst at FXStreet explains: “Lingering economic damage from last spring’s lockdowns and continuing job losses from failing business should keep requests for unemployment insurance over 700,000 for the 53rd week in a row.”
How Could it Affect EUR/USD?
Ahead of the macro data, the US dollar held steady near four-month tops and remained well supported by the upbeat economic outlook. With the coronavirus vaccination program accelerating across the country, investors remain optimistic about a further pickup in momentum over the coming weeks and months. A stronger labor market report will add to the narrative of a relatively faster US economic recovery from the pandemic and should provide an additional boost to the already stronger US.
On the other hand, the shared currency continues to be weighed down by concerns about the economic impact of the third wave of COVID-19 infections, pandemic-related restrictions and the slow vaccine rollouts. The combination of factors dragged the EUR/USD pair back to the 1.1800 mark, or the lowest level since November 23.
Meanwhile, Yohay Elam, Analyst at FXStreet offered a brief technical outlook for the major and writes: “The Relative Strength Index on the four-hour chart has bounced above 30 – exiting oversold conditions and allowing for more falls. Momentum has turned to the downside and the currency pair trades well below the 50, 100, and 200 Simple Moving Averages, a bearish sign.”
Yohay further provided important technical levels to trade the pair: “The round 1.18 level provides immediate support. IT is followed by 1.1750, 1.1690 and 1.16 – last seen in 2020 – are the next levels to watch. Some resistance is at 1.1836, the previous 2021 low, and then by 1.1875 and 1.1910.”
Key Notes:
“¢ US Initial Jobless Claims Preview: Vaccination and economic progress
“¢ EUR/USD Forecast: Three reasons why the vaccine truce is only worth a dead-cat bounce
“¢ EUR/USD in 2021 lows, gets ready to break below 1.1800
About US Initial Jobless Claims
The Initial Jobless Claims released by the US Department of Labor is a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market which influences the strength and direction of the US economy. Generally speaking, a decreasing number should be taken as positive or bullish for the USD.
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