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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:

  1. 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.
  2. 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.
  3. 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.
  4. 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:

Euro dollar down April 7 2015 technical 60 minute chart USD comeback

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