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US dollar retains significant daily gains after NFP.
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Employment report boosts US dollar and yields.
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EUR/USD heads for a modest weekly loss.
The EUR/USD bottomed on Friday at 1.0140 and then rebounded. The recovery of the euro was not strong enough to regain 1.0200. Near the end of the week, the pair looks vulnerable, on the back of a stronger US dollar.
The July employment report showed the US economy added 528K jobs, much more than expected. US yields jumped after the report boosting the greenback across the board.
After NFP, the key report next week will be US inflation numbers. The July CPI is due on Wednesday and a monthly 0.2% increase is expected. On Thursday the PPI will be released. The numbers will be critical for Fed rate expectations. The employment report left the doors open to aggressive tightening.
Another week in the range
Despite the FOMC and NFP, EUR/USD is moving sideways, as it has been since mid-July. The euro continues to decline from around the 1.0280 zone while at the same time finding support around 1.0100.
“The weekly chart shows that the long-term bearish position remains intact. Technical indicators hold within negative levels, momentum advances but RSI extends its consolidation to around 31. At the same time, the 20 SMA moved almost vertically to the south, about 350 pips above the current level but 800 pips below the long-term, a sign of bearish dominance”, explained Valeria Bednarik, chief analyst at FXStreet.
According to Bednarik, a break below 1.0105 will open the door for a retest of parity. On the upside, she argues “EUR/USD would need to accelerate through 1.0280 to shrug off the negative stance and extend its recovery towards 1.0360 first and en route to 1.0440 then.”
Technical levels
EUR/USD
