You Know The Market Doesn’t Like The USD When It Dives 100 Pips On Such Numbers
In our last update, we said that though we were bearish on AUD/USD we had to wait until the US employment report was published. This turned out to be the right decision. The report was published, the market didn´t like it and AUD/USD jumped 40 pips higher.
So, instead of selling this forex pair at the 50 SMA, we opened a sell forex signal at the 100 SMA, which came about 40 pips higher. We´re about 10 pips in profit now.
Back to our topic, I think that this dive in the USD is an overreaction. Yes, the economic data was a bit soft, but it shouldn't have been enough to put the US economy in a slide and most of the numbers balance each other.
The monthly average earnings remained unchanged, while the unemployment rate fell to 4.3% and the underemployment rate declined to 8.4% from 8.6%. Although, the participation rate, which is the rate of people seeking work, fell by 0.2% as well.
As you can see, the report is slightly dovish, which doesn´t exactly justify the big decline in the USD. What does this sort of price action tell us?
It tells us that the market is leaning against the Buck right now since the disappointing data has a lot more impact on the USD than the positive numbers. Therefore, we have to be careful on USD longs until the market sentiment changes.
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