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The US Non-Farm Payrolls report disappointed by falling short of expectations in the headline number and in important components. As this report is important for the tapering decision, the dollar fell across the board.

Also the euro enjoyed some gains, but after the initial reaction, the pair returned to the low levels. This is a sign of weakness. Can we see a breakdown of support or even a bigger downfall?

Expectations were high for the Non-Farm Payrolls, especially after a strong employment component in the services sector PMI and low jobless claims numbers. A figure of +169K was disappointing, and the components were worse: the participation rate plunged to 63.2%, the lowest in 35 years, and last month’s already disappointing number got a big downwards revision.

EUR/USD went from 1.3115 to resistance at 1.3175 and began sliding from there. At the time of writing, it is only at 1.3130 – a mere 15 pips gain.

Yes, the taper train is probably on track so the dollar has room to rise back, but the reactions in other currencies are telling: GBP/USD remains around 50 pips above the pre-NFP levels (with EUR/GBP dipping below 0.84), and USD/JPY is 50 pips lower. Also the weak Aussie is on a roll.

The euro still suffers from Mario Draghi’s performance: he remained very cautious about the recovery. In addition, the big drop in German industrial production and Greece’s issues weigh.

Support is found at 1.31, followed by 1.3060. 1.31 held well after Draghi, but could come under attack if EUR/USD completes erasing the post-NFP gains.

Further reading:  EURUSD Expected to Trend Down based on Volatility, Rate of Change