Daily Forex Signals 13.03.2017

EUR/USD recovers on ECB rate hike talk, Fed widely expected to hike on Wednesday

Macroeconomic overview

Nonfarm payrolls increased by 235k jobs last month as the construction sector recorded its largest gain in nearly 10 years due to unseasonably warm weather, the Labor Department said on Friday. January's employment gains were revised up to 238k from the previously reported 227k. Job gains averaged 209,000 per month over the past three months, well above the 75k to 100k needed to keep up with growth in the working-age population.

EURUSD Daily Forex Signals Chart

Last month's brisk clip of hiring was accompanied by steady wage growth, with average hourly earnings rising 6 cents, or 0.2%. January's wage growth was revised up to 0.2% from the previous 0.1% gain. That lifted the year-on-year increase in wages to 2.8% from 2.6% in January.

The unemployment rate fell one-tenth of a percentage point to 4.7%.

Fed Chair Janet Yellen signaled last week that the U.S. central bank would likely hike rates at its March 14-15 policy meeting. Investors shrugged off better-than-expected jobs report as a hike had been already priced in. We saw a further recovery of the EUR/USD strengthened by the ECB rate hike talk.

Some European Central Bank policymakers raised the possibility raising interest rates before the end of asset purchases but the discussion was isolated and did not enjoy any broad support, two sources familiar with the discussion said on Friday.

Bloomberg reported earlier on Friday that the ECB's Governing Council discussed such an option on Thursday but without a specific scenario or timeline.

When asked about it on Thursday, ECB President Mario Draghi said he would not speculate about such an option and the bank's guidance remains that it expects rates to remain at present or lower levels for an extended period and until after the end of its net asset purchases.

The euro firmed to one-month highs against the dollar in Asian trading on Monday.

Technical analysis

 The EUR/USD broke above the resistance of 1.0680, February 16 high on Friday. The recovery was stopped today at 1.0714, near 23.6% fibo of January-February rise. The 7-day exponential moving average crossed 14-day ema and both averages are positively aligned. RSIs are biased up. Technical analysis suggests further EUR/USD gains.

EURUSD Daily Forex Signals Chart

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