FX.co ★ Forecast for EUR/USD on May 5, 2023

EUR/USD

Yesterday, the European Central Bank raised the rate by the expected 0.25%, and ECB President Christine Lagarde "promised" another increase around September. In general, the ECB's mood cooled investors' expectations, and the euro fell by 46 points.

Yesterday, the Marlin oscillator managed to record a low below the zero line (-0.0003), which, for a market with moderate volatility, shows the effective desire for the asset. The price needs to consolidate below 1.1033, which is easy to do with today's employment report since there's a possibility that it may exceed expectations. The euro's target is the convergence area of the MACD line with the embedded line of the descending price channel at 1.0920.

On the four-hour chart, the price has not yet been able to consolidate below the MACD indicator line – the volatility after the ECB meeting is making itself felt. Also, the Marlin oscillator did not stay in negative territory.

I believe that today's US employment report will turn out to be better than forecasts, as the preceding indicators this week indicate an improvement in the labor market. This is a sharp increase in employment in the private sector (296,000 versus a forecast of 148,000), a sharp decrease in the number of layoffs according to Challenger data, and a normalization of unemployment benefit claims (albeit above average).

And such an important point – three major American banks: PacWest Bancorp, Western Alliance Bancorp, Metropolitan are at risk of bankruptcy in the coming days, with KeyCorp, Valley National Bancorp, and a number of small banks approaching. The stock market is no longer able to grow at a rate of 5.25% (especially the banking sector), S&P 500 is falling heavily for the third straight day (yesterday -0.72%), so the counter-dollar currencies are unlikely to rise even with neutral macro data.