EUR/USD is trading at 1.1830: these are very low levels when looking back just one week and especially if we look back at the pre-holiday levels, but it has already seen lower levels this week.
Looking at NFP reactions from October, November and December, we see a significant bounce of the pair. So, has EUR/USD reached a low for the next few days or weeks?
EUR/USD reached a bottom of 1.1754 and has since come back up. The reports about the 500 billion QE program could not push the euro lower. Was that the first sign of bottoming out? The markets might have waited for the US Non-Farm Payrolls.
So, when the NFP came out, the dollar was initially stronger. A gain of 252K jobs in December + an additional 50K in revisions supported the greenback. However, the big disappointment coming from the 0.2% slide in wages eventually crept in and now pushes the dollar lower.
Towards the NFP reports released in early October, early November and even early December when the outcome was superb, +321K and upwards revisions, the pair actually bounced back up for quite a few days before finding fresh reasons to fall.
Are we seeing this phenomenon once again?
Here is the daily chart going back to late September. Explanation below:
Note the downtrend support formed in the NFP event of October, touched in the NFP report in November and once again in December.
This line did not hold in late December, when the pair totally collapsed together with the Greek government, Spanish inflation and the upbeat US GDP.
So while the line is not with us anymore, we could still get a bounce on EUR/USD before the next round of news send it lower.
More:
- 3 reasons why US wages are set for a big rebound in January
- Could ECB QE Be ‘Buy The Rumor Sell The Fact’ For EUR/USD – JP Morgan
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