The Easter holiday is fully over. As European traders return to their desks after a long weekend, they seem to have second thoughts about the USD sell-off that followed the very disappointing US Non-Farm Payrolls.
EUR/USD slips down to 1.0870, basically erasing last week’s gains.
A gain of only 126K was bad news for the US dollar: the slowdown in the US economy could translate to a delay in the next rate hike. However, as time passed by, different lines of thought came across:
- This may be a one off: a fall under 200K after 12 excellent months is just one report. This thought accompanied markets already on Friday, but now it moves closer to center stage.
- Q1 is always weak: Well, it is not “always weak”, but we have seen bad weather hit the economy also last year, so it may return now.
- Fed officials not over excited: We have heard from a few Fed speakers since Friday. They are not happy with the NFP but also not devastated. The cautious approach of lifting rates between June and September is maintained.
- If not the dollar, then what? As we noted on Friday, the US dollar is still the cleanest shirt in a dirty pile. And within the other shirts, the euro is not the best candidate: not because of fundamentals but because of QE.
More: EUR/USD: Whether The Weather – BofA Merrill
Here is how it looks on the chart:
In this week’s podcast, we feature an Interview with FXStreet President Francesc Riverola on the industry, volatility and more
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