Chinatown and downtown Manhattan in New York from Manhattan bridge. Image source: William Perugini © 123RF.com
The number of people claiming unemployment benefits in the US surprisingly rose last week, said the Department of Labour. According to its weekly labour force survey, 1.106 million people filed for support last week.
The recorded performance exceeded the consensus forecasts, which were projecting an increase of 930 thousand.
US Jobless Claims. Image source: TradingEconomics.com
This surge in the number of people seeking unemployment benefits represents a threat to the still recuperating labour market in the US.
The recent jump of COVID-19 cases in the country and elsewhere is likely to hurt investors' sentiment as the risk of a new wave of government restrictions could jeopardise the tentative recovery of the labour market.
In a sense, the uptick of COVID-19 cases parallels the upsurge of initial claims and vice versa. Therefore, the threat of a second epidemic wave could have a direct impact on the US employment conditions.
The US government and the FED need to foster maximum employment without closing the economy for a second time this year, which is a goal threatened by the prospects of exponential growth in infectious cases.
Even still, today's downbeat initial claims data did not interrupt the recent rebound of the US dollar. The temporary break in the rally of the euro, which is prompted by the pessimistic economic forecasts concerning the largest industries in the Eurozone, represents a much-needed respite for the reeling greenback.
As can be seen on the 4H chart below, the EURUSD pair has retreated to the historic resistance level at 1.18000. The latter is currently serving the role of a temporary support level.
The prominence of this support level is further substantiated by the fact that it currently coincides with the Ichimoku Cloud, both of which highlight a crucial test area for the recent dropdown.
If the price action manages to break down below the two, then the bearish correction could be extended towards the minor support level at 1.17000.
Conversely, if tomorrow's industry numbers in France and Germany beat the initial market expectations, the bearish correction of the EURUSD could be terminated promptly on renewed demand for the euro.
This would result in a rebound for the EURUSD from the 1.18000 support level, and a subsequent attempt by the price action at breaking out above the recent yearly high.
EURUSD 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
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