In my analysis, the Euro could further [Read more...]
The Euro vs US Dollar (EUR/USD) Weekly Outlook (October 10-15, 2011)
Euro To Bounce Back Against The Greenback?
The euro got hammered by the us dollar during the last 4 days when it slipped sharply from 1.4940 last May 4 to a low of 1.4254 yesterday. However, it appears that the euro bulls will be looking to rebound from its recent losses shortly. [Read more...]
Euro Versus The US Dollar (EUR/USD) Could Drop Further
The Euro dropped almost 300 pips from 1.3859 to 1.3543 against the US dollar last week when European Central Bank President Jean-Claude Trichet said [Read more...]
Violent Clashes In Egypt Rocked The Dow And The Euro
The US stock market dropped sharply last Friday as violent clashes in Egypt rocked the global financial markets. [Read more...]
Easy 100 Pips In The Euro Against The US Dollar!
Good day forexers! In my technical analysis, there could be a symmetrical triangle forming in the [Read more...]
EURO Still On An Uptrend Against The US Dollar
Hello traders from all parts of the world! My forex pick for the day is the EURUSD pair or “fiber” as many would call it. As you can see, the Euro has been strong against the greenback since it broke out from the cup and handle formation last September (kindly check here). Afterwards, a bullish symmetrical triangle formed, broke out to follow through the upward momentum and reach the 1.4282 9-month high last November 4 (kindly see it here). However, the Euro now sank against the US Dollar dropping by a thousand pips since the beginning of this Month. Key factors highly involved in demoting the pair’s value include the [Read more...]
Euro to Get Back on the Bullish Track
Good day ladies and gents of FX trading! In today’s forex pick is the daily canvas of the EURUSD pair a.k.a the “fiber”. The last time I posted on this was when it broke out from the bullish symmetrical triangle formation (kindly see this) and made a new 10-month high at 1.4248. However, as you can see from its chart, the EURUSD has slipped for a fifth straight day today after marking that high. Those who are long on the euro and short on the greenback, however, should [Read more...]
Breakout Alert! More Upside Seen on the EUR/USD!
Calling all euro bulls! The EURUSD pair or the “fiber” as what some people call it has just broken out from a symmetrical triangle. As you can see from its daily chart of this forex pick of mine, the pair has actually reversed its downtrend when it escaped from a cup and handle pattern. It then continued to trade strong before consolidating into a symmetrical triangle for the last two weeks. Given this recent price action, though, I can say that buying the euro and selling the US dollar at the same time would be a better idea at least from a technical point of view. Such breakout could propel the pair up until it hits some resistance at 1.4250 or even at 1.4300. That’s at least a 200-pip upside in the near term. Not bad! On a different perspective, you might want to chance upon my colleague’s target price in his post.
The remaining days of this week would be crucial for the EURUSD. A high degree of volatility is expected in all currency pairs especially the fiber because of the US Federal monetary policy decision tomorrow and the release of the US’s non-farm payrolls (NFP) report on Friday. There has been talks that the Fed would engage into another non-traditional money printing activities (quantitative easing) in the days to come in its desire to further ease the day-to-day market interest rates in order to encourage more lending and spending. Puff Daddy predicted it correctly – “More money, more problems.” Of course the problem here is reflected on the greenback as its valuation gets diluted by the increase in money supply. Friday’s NFP will likewise create some noise. Based on the recent estimates, about 65,000 jobs were added by US firms in the last month as against the 95,000 that got laid off in the previous period. If this figure is correct, then such would spark optimism among market participants, causing them to continue supporting non-dollar currencies like the euro.
EURO Could Further Strengthen Against The US Dollar
Hello forex peeps, here’s an update on the Euro against the US Dollar. The last time my colleague posted on the EUR/USD was when the ascending channel in the 4-hour chart was still intact (kindly see his post here). By the way, if you want to see his analysis when he made a “buy call” also on the EUR/USD as it had just broken out from the cup and handle formation in the daily chart last September, please see this link. Anyway, the ascending channel in the 4-hour chart may have been broken already but that’s because the pair decided to consolidate sideways. This might be a good thing, because right now, the fiber (EUR/USD nickname) could actually be forming a symmetrical triangle as it moves sideways. Zooming closer to its 4-hour chart, you will see a clearer picture of this area pattern. Symmetrical triangles are naturally neutral regarding which direction it would head but if we factor in the current trend, which is the uptrend, then this formation will most likely be bullish by 90%.
Based on the given symmetrical triangle formation, the EUR/USD could further strengthen against the US Dollar if it breaks out from this area pattern. In case it does, the pair could rise and find some resistance at the 1-month high of 1.4951. If the pair clears out that resistance, the next one could be 1.4579. On the downside, if the triangle pattern turns out to be bearish which is most unlikely, the immediate support could be 1.3700. If the fiber still drops below the 1.3700 marker, the next support could be 1.3335. As the EURO could head further north against the US dollar, in my colleague’s last post suggests that the US dollar could also weaken again not only against the EURO but most currencies (here’s the post).
Bullish Gap Seen on the Euro Against the US Dollar
Good day Forex friends! Last October 7, I mentioned in my post (kindly see it here) the the euro has still a lot of room to move up against the US dollar. Zooming closer to its, 4-hour chart, you will see that the EURUSD pair has been trading in a very well defined rising channel. Given the pair’s present trend and the channel’s degree of ascent (45 degrees), I’d say that the euro rise at least in the near term could be easily sustained. Furthermore, another bullish sign propped out of the pair’s charts when it gapped up to open the this week. A bullish gap is an occurrence when the opening price opens much higher than the high of the previous period. Obvious, this is a positive sign as this suggests a rapid demand for the security which in this case is the euro. So as long as the support of the rising channel or the uptrend line holds, the EURUSD or the fiber would most likely conntinue its move north. In case it weakens, the channel’s support and the bottom of the channel could keep it from falling further.
For this week, no material economic data will be reported from the euro zone. Given the lack of economic flow, the EURUSD may just resume its present trend. Then again, it’s also possible for the pair to retrace a bit as investors lock in some of their profits.
More Room to Move Up for the Euro Versus the US Dollar
Hello FX friends! Last September 24, I specifically noted the Euro’s potential to gain in valuation (kindly see that post here). At that time, the EURUSD pair or the fiber had just broken out from a cup and handle formation. So if you took my cue and went long there and then, you would have been up by almost 600 pips already! While you might have missed the first the EUR’s initial move, technically speaking, there’s still a chance to ride this train. For one, Elliot Wave Theory states that the third wave is usually the longest wave of a 5-wave cycle. In some instances, though, the third only equals the length of the first wave. But even if this is the case, notice that the present wave 3 still falls short of wave 1, suggesting that there could be more space for the pair to move higher. Secondly, the pair’s upside target (gauged by projecting the height of the pattern from the point of breakout) has not yet been met.
Earlier today, the European Central Bank (ECB) left its interest rate unchanged at 1.00% for the 17th straight month. During the global financial crisis and the recent credit troubles in the Euro zone, the ECB was forced to lends banks with cheap cash and to support this until the whole bloc recovers. While the economy has been rebounding, it remains to be fragile and pulling the central bank’s lifeline would endanger the economy once again. Despite the ECB’s decision to hold rates, the euro continues to trade strongly against the greenback because of the overall bias against the USD.
Tomorrow, the US’s NFP report will be published. Expect an increase in volatility around the time of the data’s release. In any case, firms in the US are seen to have added 3,000 jobs after they laid about 54,000 during the previous month. An increase in employment, as we know, would be beneficial for the economy and, thus, would spark some risk taking. A jump in optimism then would lead investors to more US dollar selling which in turn props up the valuation of the euro.
EURO To Rise By A Whopping 1,250 Pips Against the US Dollar?
Hiyo FX peeps! Did I get your attention? Yes. I believe that its very likely that the EURUSD pair could gain by about 1,250 pips. Now that’s a lot! As you can see from its daily chart, the fiber has recently broken out from a very nice cup and handle formation. At present, the pair is trading just above the neckline of the pattern. With the stochastics in the overbought territory, it could exchange in a range-bound fashion for awhile before moving north. Now, a move past the 1.3500 resistance could send it on the way towards its minimum upside target (computed by projecting the height of the pattern from the point of breakout at 1.4750. If all go well, it could achieve this target in about 6 months which is also the time that it took to form the pattern.
Despite the recent dip in Europe’s Purchasing Managers’ Indices (PMIs), the business climate in Germany as measured in the German Ifo Business Climate Index surprisingly jumped to its highest score in more than three years this month. The index came in at 106.8 which is over the market’s 106.3 estimate. This rise indicates that German companies can withstand the weaker international demand. On the other side of the globe, in the US, the Fed’s inclination to place another set of stimulus programs to support the slowing growth in the US’s economy has of course weakened the greenback to the benefit of the other non-dollar currencies like the EUR. This plus the rally in the US equities markets have also urged investors to move away from the USD in exchange of the higher yielding assets and anti-dollars like the euro.
Just now, the US’s core durable orders for the month of August have grown by 2.0%, which is almost twice of the 0.9% forecast. The previous month’s change was also positively revised to -2.8% from -3.8%. These numbers signify that the chances of the earlier threat of a double dip recession in the US economy have gotten lesser and lesser.
For next week, the CB Consumer Confidence in September is seen to fall to 52.5 from 53.5. But given the strong rally in the global equities markets for the past two weeks which show the manifestation of consumer confidence in the markets, it is therefore possible for the index to have a better-than-expected result. A better-than-projected mark, as we know, could spur some risk taking and EUR buying.
Is the Euro Back on the Bullish Track?
Well, well, well. The EURUSD pair or the fiber as what traders call it in the streets appears to have broken out from a rectangle or consolidation. You see, the had been trending up from a low of 1.1876 last June 7 to a high of 1.3334 in August before correcting. All along I thought that the pair would already reverse but it did not. What it did was it only corrected to its 50% Fibonacci retracement level. It then continued to range or trade sideways until yesterday where it broke out to the upside when it finally breached the 1.2900 hurdle. However, the pair seems to be meeting some temporary resistance at 1.3000. If and when it moves past this number, chances are it would once again revisit its previous high just above 1.3300. Given the upside breakout, I can say that there is now a higher probability that the euro will move higher against the US dollar in the near term.
Germany’s September Zew economic sentiment index came in sour, unexpectedly falling to -4.7 (vs. 10.7) from from 14.0. The same sentiment index for the entire euro zone also slipped to 4.4 from 15.8. The slide in confidence can be attributed to the wide budget cuts done by the governments that make up the economic zone. Remember that the zone was being plagued with a credit crisis. One way to plug the countries’ deficit holes would be to drastically slash their spending. A cut in spending would obviously limit the business activity in the region but given Europe’s present fiscal situation, such move is really warranted.
Despite this, the euro still managed to outmaneuver the greenback thanks to the better than expected US core retail sales. Core retail sales in August grew by 0.6% which is twice of the market’s 0.3% consensus.
No high impact economic reports are due from the euro zone for the rest of this week. The euro, however, could take its cue from the releases from the United States. Today, the Us will publish its Empire State manufacturing index and its August industrial production. The former is seen to have reached 8.7 from 7.1 while the latter is expected to have increased again by 0.3%. The expected improvement in the Philadelphia Fed manufacturing index (from -7.7 to 0.9) which will be due tomorrow and the projected jump in the Prelim UoM Consumer Sentiment (from 68.9 to 70.3) could also induce some risk taking. Watch out for these reports.
The EURO Bears Got Trapped!
Hiyo my avid forex fans! In my previous article about the euro, I mentioned that its recent rally after breaking down from what appears to be a head and shoulders formation could be over soon. However, a full blown breakdown and a reversal did not really pan out as the euro bulls were able to out-muscle the bears to place them back on top. As you can see from the EURUSD’s 4-hour chart, the bears were forced to cover their short positions when the price of the euro went back above the neckline of the head and shoulders. The pair actually found support at the 50% Fibonacci retracement level which interestingly lies almost in line with the psychological 1.2600 marker. For awhile, it met some resistance at the neckline and it even fell below the support of the rising wedge (please see my previous post here). But like I said, the euro was able to turn the tide to its favor.
Yesterday, the fiber of the EURUSD broke out from a bullish pennant pattern. Though, it would more likely range for awhile before making a move north. The stochastics, being in the overbought region, also suggests a temporary pause in its ascent. If its able to move past the resistance at 1.2900 then its next stop would be at 1.3000. A move past 1.3000 could propel it higher all the way to the peak of the head of the former formation.
The better-than-expected US employment report pushed the anti-dollar currencies like the EUR back into the spotlight. US firms only slashed 54,000 jobs as compared to the 101,000 estimate. The job cuts in the previous month were also revised downwards to 54,000 from 131,000. Still, the US’s unemployment rate rose slightly to 9.6% from 9.5%. Nonetheless, the encouraging jobs numbers (compared to the market’s consensus) lifted the investors risk appetite during the session.
No high impact economic reports are due this week in the euro zone. The euro, however, could take its cue from the developments in the other nations particularly in Australia, Canada, and the UK. Australia, the UK, and Canada will have their monetary policy decision this week. Australia and the UK are expected to keep their rates unchanged while Canada is anticipated to hike. Any hikes and/or hawkish statements could favor the non-dollar currencies including the euro.
Are the Dollar and Euro to be Dance Partners in Lieu of Domestic Growth?
Pick your movie metaphor, but it appears that the U.S. Dollar and the Euro are entwined in their own version of the “Last Tango in Paris”, where neither is sure where the relationship will head, but time marches on. Ever since the Greek debt crisis hit the global stage in May, markets have been in turmoil, until finally resuming something short of normalcy in the past few weeks. Volatility has subsided. Fundamentals seem to mean something once again, but uncertainty still hangs like a foreboding cloud over the horizon.
A look at the “EUR/USD” chart history for the past year does not reveal any hints of where it might head either:
Forex news reports have showcased the Euro’s ten-year march to fame and glory. It bobbled in 2008 when Lehman Brothers went down, but resumed its march thereafter, only to tumble once again in May. It rests now around the $1.30 mark, the same range it visited during its 2008 fall. Perhaps, U.S. tourists and businessmen will get more for their buck when traveling to Europe these days, but there are more important issues to consider going forward.
The Euro and Greenback have been tied together in this sideways trading pattern for over a month. German exporters are brimming with confidence and have been quick to grasp a competitive advantage in the global export market, luxury cars and all. U.S. exporters remain hopeful, but the turmoil in commodity markets happened after planting season had already begun, leaving no opportunity to adjust priorities. U.S. importers are eyeing European goods once again, but more imports, even at reduced prices, will only exacerbate a deficit-laden trade imbalance and weaken the Dollar more. The two dance partners twirl about as all onlookers debate when the dance will end and a breakout will occur.
Europe has well-documented debt issues among its weaker member states, known euphemistically as the PIIGS (Portugal, Italy, Ireland, Greece, and Spain). Concerns about a possible Greek default on its national debt are surfacing again in the news, and German bankers are disturbed that Spain has ignored requests for fiscal austerity and resumed public spending on national projects. The U.S. has debt and deficit problems of its own, corporations are sitting on nearly $2 trillion in cash but will not hire domestically, and any government policy changes in an election year are highly unlikely.
On balance, the relative value of the respective economies may be deadlocked due to fundamentals for some time to come. As for near-term projections, the analysts at Forecasts.org stand by their forecast of a weakening Dollar for the remainder of the year, as the Euro rises to $1.35 in December and crests at $1.36 in the quarter thereafter. Although there has been a brief dollar comeback of late related to not only the Euro, but also other “basket” currencies, the question is will this strength hold if poor preliminary GDP news is released this Friday? This entire week is laden with economic data releases, and consumer confidence figures and another speech by Fed Chairman Bernanke will complete the Friday trinity, so to speak.
The major “elephant in the room” that is blocking progress is the need for domestic growth. Domestic growth creates employment and increases tax revenues that can reduce deficits and pay down debts. According to the IMF’s recently published “World Outlook Report”, GDP growth for developed countries of the world has been on a 40-year decline from 4% in 1970 down to 2% for 2010 and the five years ahead. A GDP growth figure of 1.5% is seen as necessary to provide enough jobs for the growing population on annual basis. While we languish about 2%, developing countries are more in the 8% range, with China trying to rein their industrial growth machine back to 9.7% for 2010.
Gold has also made an incredible run up of 7% in the last four weeks, indicating that risk aversion is once again creeping into market psychology. Concerns of a possible double-dip recession or a Greek default have investors worried. Although corporate earnings were up in the stratosphere, the emphasis was on Asia for future growth, while most of Asia is presently consolidating their near-term growth plans. Pessimists believe that a major drop in the S&P 500 is imminent.
But, the beat goes on, as does the “EUR/USD” dance. In the “Last Tango in Paris”, Marlon Brando recants from his young French protégée, but soon presses for more commitment, only to be rebuked by a gunshot that leaves him dying on a staircase balcony. The two lovers were “caught up in the frenzied beat of a carnal dance they could not seem to stop.” Hopefully, our Greenback will have a better fate, or at least choose a waltz instead.
Is the Euro’s Short Rally Over? – August 30, 2010
Good day to you my Forex friends! Here’s an update on the EURUSD or the fiber as what they call it on Wall Street. The last time I covered the pair (please see my previous post here), it had just broken down from a head and shoulders formation. Since then, the pair has rallied to form what appears to be a rising wedge pattern. In case you do not know, a wedge is generally a continuation pattern as it just represent a short term rebound in prices. Such rally could be due to profit taking or short covers. At present, the pair is encountering some resistance at the neckline of the head and shoulders. If it’s unable to move past the neckline and it falls below the support of the rising wedge, it could slip at least back to 1.2600 level. Further weakness could push it all the way down to the previous low at 1.2150.
The highlight of the week for the euro zone will be the the European Central Bank’s monetary policy decision on Thursday (September 2). The ECB is expected to hold its interest rates again at 1.00% following a drop in German yields. 30-year yield, for your information, have dropped to below 3.00%. And despite the “cheap” borrowing costs, inflation at least in Germany remains subdued. In fact, the latest month-over-month German CPI reading reads at 0.00%. With consumption and inflation low, the ECB would likely be a little dovish about its short term forecast on the euro zone’s economy as a whole. Such could then send investors back to the safety of the USD.
EURO Breaks Out! But to the Downside! – August 24, 2010
Good day FX friends! Here’s an update on the EURUSD which I posted last August 17 (please see my previous blog here). In that post, I mentioned the possibility of the euro breaking out to the upside. It turns out that I was wrong as the EUR, instead of moving north, slid and broke down. As you can see from its chart, it appears that the euro’s recent rally over the greenback is over. After breaking out from an inverted head and shoulders pattern, the fiber or the EURUSD pair managed to achieve its minimum target and more. It then continued to rise and it even marked a new 3-month high at 1.3334 before dipping again. After its drastic slide from its 3-month high I though that it would reverse and turn up as suggested by what appeared to be another inverted head and shoulders. However, a break out from this pattern did not materialize. Its price then formed a head and shoulders (bearish and not to be mistaken with the inverted version) pattern. Its price action during the first days of this week proved costly as it pierced through and below its uptrend line and the formation’s neckline. Given this, the pair could now fall all the way to the 1.2150 area. Even if it rallies, the head and shoulders neckline at 1.2750 would prevent it from rising any further.
The euro lost its appeal on fears over Europe’s economy. The services PMI of France, manufacturing PMI of Germany, and the euro zone’s overall manufacturing purchasing manager index all failed to meet the market’s consensus. The French services PMI fell to 59.9 (versus 60.7) from 61.1. Germany’s manufacturing index also weakened to 58.2 from 61.2 which resulted into a broader fall in the euro zone’s number to 55.0 from 56.7. Note that the index can be used to gauge the business activity of the respective sectors in the economy. Why? Well, purchasing managers hold perhaps the most current and relevant insight into company’s view of the economy. For example, if the company is starting to pile up their invetory then perhaps it is expecting a uptick in its business in the near future. In any case, a drop in these figures suggests that the recovery in the euro zone’s economy could have slowed down.
On tap on August 25 and 26, respectively, are the German Ifo business climate index and the GfK German consumer climate index. Ifo’s account is seen to have retreated to 105.8 from 106.2 while the GfK index is projected to have increased to 4.1 from 3.9. But given the weaker-than-expected PMIs in the euro zone and the recent tentativeness in the global markets, business climate in Germany and the euro zone could have dipped as well.Such could very well reflect in the upcoming business and consumer climate surveys. If this is the case then the euro could once again take another hit.
Short Term Bullish Reversal Seen on the Euro? – August 17, 2010
Good day forex peeps! Here’s an update on the EURUSD pair or the fiber. Last August 12 (please see my last blog here), I noted the pair’s disastrous month when it fell by more than 450 pips after reaching a new 3-month high of 1.3334 on August 6. It’s a good thing that the previous support at 1.2750 and the uptrend line. Since August 11, the pair, however, has been consolidating into what appears to be an inverted head and shoulders formation. Are we about to see a bullish reversal in the euro’s valuation? Maybe. Anyway, if the pair breaks above the neckline of the formation then it could go all the way back to 1.3300. A fall below the uptrend line, on the flip side, could push it back to 1.2750. But since the uptrend line is still intact, the pair has a higher chance of moving north.
Earlier today, Germany’s and the euro zone’s Zew economic sentiment indices for the month of August came in mixed. Germany’s index unexpectedly slipped 14.0 (versus 20.9) from 21.2, registering a new 6-month low. The broader sentiment index for the euro zone, on the other hand, surprisingly jumped to 15.8 from 10.7 (vis-a-vis 10.6). Mixed data from these two accounts caused the euro to just trade flat. And with no more data coming out of the euro zone in the horizon, the EUR could just trade in a range bound fashion for the mean time. Still, the top tier economic reports in the UK and US tomorrow could cause some volatility on the euro’s short term valuation. UK is seen to have posted another 0.4% gain in its retail sales on top of its 0.7% hike in the previous month. Initial jobless claims in the US, on the other side, for the recent week is seen to have tapered to 479,000 from 484,000. Also the US’s Philadelphia Fed manufacturing index likely reached 7.2 in August from 5.1. Watch out for these reports on August 19 at 8:30 am and 12:30 pm, respectively! Upbeat tallies from any of these accounts could bolster the demand for the non-dollar currencies like the EUR.
The Euro Came Crashing – August 12, 2010
What’s up forex peeps?! Welcome to another day of forex trading! We have the EURUSD in today’s fx pick. As you can see from its 4-hour chart, the EURUSD or the fiber came crashing in yesterday’s trading. After reaching a new 3-month high just above 1.3300. , the euro slid, breaking the pair’s uptrend line in the process. In less than a week, the fell by more than 400 pips against the greenback! Ouch! At present, the pair is trading just below 1.2900 and since the next obvious support is still somewhere within 1.2800 and 1.2700, it still have some room to move lower. If the support here gets taken out, beware as the pair could fall all the way to 1.2500! But given its recent drop and its oversold condition, it can also range or even retrace as sellers pocket some of their profits.
Fundamentally, the slide in the the euro was caused by several factors. The weaker-than-expected retail sales (17.9% versus 18.5%) in China damped the confidence of the market. You see, a 17.9% is not really weak but apparently the market is expecting a lot from China. Why? Well, China is now the number 2 biggest economy in the world and a robust figure in its retail sales could mean business for all its trading partners. The number 3 economy, Japan, also failed to impress with only a 1.9% jump in its machinery orders, lower than the 5.6% forecast.
The Bank of England and the US Federal Reserve worsened the situation further by saying that risks are still present in their respective economy.
As a result, risk aversion in the broader market made a comeback, leading investors to flee to the safety of the greenback. Stocks, as well as currencies like the euro, as a consequence, were sold off.
The highlight of today will be the release of the US’s unemployment claims for the week ending July 31. Initial jobless claims are seen to be at 465,000, lesser than the 479,000 tallied the week before. Now, lesser jobless claims could ease the markets while a worse count would more likely extend the losses. Watch out for its announcement today at 12:30 pm GMT.
EURO Soared Over the US Dollar On Dismal NFP Result – August 6, 2010
Hello forex peeps! On today’s fx feature is the 4-hour chart of the fiber or the EURUSD pair. In my previous post about it (please see it here) last August 3, I mentioned that as long as its uptrend holds, it would continue to move higher… and it did. As you can see, the pair had consolidated into a symmetrical triangle after reaching a high of 1.3262 on August 3. It then broke out to the upside after finding support at the uptrend line. The presence of a hidden bullish divergence (where the price moves higher and the stochastics moves lower) and its oversold condition when it fell back to the uptrend support could have also led the investors to buy up the euro in exchange of the USD. Still, the pair is facing some heavy selling pressure at 1.3300. Given this, it might a harder time in moving above the mentioned level. It would more likely consolidate again or even retrace before it shoots up again. A break, however, of the uptrend line could push the EURUSD back to 1.3100. But since it is on an uptrend, a move higher is more likely to take place.
The euro’s recent jump was due to the dismal result of the US’s non-farm payrolls (NFP) report. Imagine, US firms about 131,000 jobs in Jul which was far worse than the expected 63,000 job cuts. The country’s unemployment rate, though, managed to remain at 9.5%. Nonetheless, the worse-than-projected NFP count spurred some risk aversion in the market. The difference this time though is that the euro, as mentioned, soared against the greenback. Usually, the EUR gets sold off whenever there is risk aversion in the markets since investors generally seek shelter under the safety of the USD whenever these happen. But apparently, the market is already becoming wary of the US’s recovery which in turn leads them to question the viability of the US dollar.
For the past week, I have observed that the movement of the USD has been more or less positively in line with the US’s fundamentals.Will this trend continue? We will see. If it does then any weak economic update from the US next week could push the EURUSD higher. The Fed is scheduled to release its interest rate decision on Tuesday (August 10) while the US’s inflation and retail sales numbers are due on Friday (August 13). Watch out for any downbeat outlook and dovish statements by the FOMC and/or weak inflation and retail sales numbers!
