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Euro Reverses Losses Follow Robust Sentiment Figures

David Becker
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Euro Reverses Losses Follow Robust Sentiment Figures

The Euro reversed most of Friday’s losses as better than expected sentiment trumped the solid US jobs report released on Friday. Although the headlines US jobs number were in line with expectations is has become clear that growth in the 4th quarter will likely ease to a number slightly below 3%.

The Eurozone Sentix investor sentiment moved higher to -11.9 from -13.7 in October despite a renewed dip in the reading for the current situation. The current situation was offset by an improvement in the expectations reading, which jumped to -2.0 in November from -7.3 in October. This still means pessimists outnumber optimists, but the downward trend has been halted, which is good news.

Despite a headline number on jobs in the US that shows 214K jobs were created and an unemployment rate of 5.8%, recent construction spending and trade figures warn of a notable downward revision in Q3 US to possibly below 3%, and closer to 2.5%. That said, the employment growth, coupled with the decline in gasoline prices, will likely boost discretionary consumer spending. Gasoline prices in the US dropped 14 cents per gallon and the average is now below $3 per gallon the lowest in 5-years.

Private employment in the US rose by 209k and prior payrolls were revised higher for September to 256k from 248k and the numbers were revised to 203k from 180k in August. The workweek ticked up to 34.6 from 34.5.

The Euro will have a difficult time trading through resistance near the 10-day mvoign average at 1.2530. Support is seen near the Friday lows at 1.2370. Momentum is flattening as the MACD is printing in negative territory but shifting higher. The RSI moved higher with price action reflecting accelerating positive momentum, while printing a reading of 40, which his on the lower end of the neutral range.

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