Friday was a busy day. particularly lively on the EUR/USD and on Forex in general, the Dollar having soared in the afternoon, after having initially fallen at the start of the day.
In this context, the EUR/USD, which had marked the beginning of the day. a daily high at 1.0880 in early afternoon, tumbled up to a hollow at 1.0772 last night, a drop of over 100 pips in a few hours, and the currency pair closed at 1.0772. close to this trough, at 1.0776.
EUR/USD collapses despite a disappointing NFP report (almost) in all respects
Yet, the most important event of the day, the NFP report, turned out to be the most important. overall disappointing, with job creations above expectations (187k vs. 170k anticipated), more than offset by a strong downward revision to the previous month’s figures ( from 187k to 157k).
In addition, the unemployment rate posted a surprise increase to 3.8% against 3.5% expected. Finally, average hourly wages have increased. less than expected. All this could therefore have weighed on the Dollar, fueling speculation about the end of the US rate hike, but nothing happened, and the ISM manufacturing index slightly higher. ;better than expected released yesterday afternoon is also not a valid reason for a rise in the dollar as it has been. found yesterday.
Fed rate expectations also don’t explain yesterday’s greenback rise, as the probability of break in September progressed; to 94% vs. 90% the day before, as the odds of a resumption of the rate hike in November after a pause in September fell to low. 33.5% vs. 43.9% the previous day according to the Investing.com rate barometer.
The technical context for the EUR/USD is deteriorating sharply
Whatever the reasons for the soaring dollar, and the fall of EUR/USD, on Friday, the impact on the graphic context is undeniable, and could favor a greater decline.
As seen in the chart above, Friday’s fall in the Euro Dollar has led to the currency pair below its 200-day moving average. In addition, EUR/USD threatens to break below a long-term trend line that has been stretching since March.
If this break is confirmed, the next bearish objective will be the psychological threshold of 1.07, before the low at the end of May around 1.0635.
If à the reverse EUR/USD bounces back the reopening of the forex next week, it is the psychological threshold of 1.08 and the 200-day MA at 1.0814 which will form the first obstacle, before the zone of 1.0850, then that formed by the threshold of 1.09 and the moving average 100 days at 1.0920.
Why did the EUR/USD collapse despite a bad NFP report at all levels?