Oil prices extend losses as traders downplay Russia sanction risks
- Recent Non-Farm Payrolls reports show that hiring in the US is slowing, but historically low initial claims figures signal that layoffs are not meaningfully rising yet.
- Today brings key inflation reports from across the globe, including flash CPI readings out of the Eurozone’s largest economies, and Core PCE.
- EUR/USD saw a noteworthy technical bounce – see the key levels to watch from here!
This week’s major economic releases have been clearly weighted toward the back half of the week, with the US data setting the stage ahead of the most highly anticipated releases of the week, key inflation reports from major economies on Friday.
Despite persistent calls for US economic data to roll over, the releases show that the US economy continues to chug along at a solid, if not blistering pace. While not necessarily the most timely release, the Q2 GDP growth estimate was revised up from 3.0% q/q to 3.3%, above the 3.1% reading expected.
More to the point, the weekly initial jobless claims figure came in at 229K, a couple ticks below the 231K reading expected by most economists. Put simply: recent revisions to Non-Farm Payrolls reports show that hiring in the US is slowing, but historically low initial claims figures signal that layoffs are not meaningfully rising yet, demonstrating “labor hoarding” on the part of employers.
Today brings key inflation reports from across the globe, including flash CPI readings out of the Eurozone’s largest economies (including Germany, France, Italy, and Spain), and the Federal Reserve’s preferred inflation gauge, Core Personal Consumption Expenditures (PCE).
The latter is particularly important, as an uptick in price pressures could potentially nudge the Fed to the sideline next month, if confirmed by a soft NFP report and/or a hotter-than-expected CPI reading next month.
Euro Technical Analysis: EUR/USD Daily Chart
Source: StoneX, TradingView
Against that backdrop, EUR/USD saw a noteworthy technical bounce. The world’s most widely-traded currency pair has rallied more than 100 pips off the low near the 1.1590 support level, keeping the unit above the midpoint of its 3-month sideways range between roughly 1.14 and 1.18. The rising 50-day EMA in the same zone contributes to a bullish medium-term outlook.
A cooler-than-expected Core PCE report could serve as a catalyst for the week’s bounce to extend, with bulls eyeing the monthly highs in the 1.1725 area initially, with longer-term potential toward the 4-year high around the 1.1800 handle. Meanwhile, a reversal to break below the 50-day EMA and 1.1590 support level for the first time in a month would shift the near-term bias back in favor of the bears and bring the 1.1500 handle into view as an initial downside target.