EUR/USD Forecast – Euro Drops After Non-farm Payroll

Euro vs US Dollar Technical Analysis

The Euro has broken below the 1.10 level to show signs of weakness as the US dollar has strengthened after the employment numbers came out hotter than anticipated. With that being said, the market is likely going to price in the idea of perhaps a 25 basis point rate cut instead of a 50 basis point rate cut. And if that is in fact the case, at least as far as the Federal Reserve is concerned, it would make sense that we continue to drop towards the 1.08 level.

If we turn around and recapture the 1.1050 level, then it could send this market looking towards the 1.12 level. In general, this is a market that I think continues to be very noisy, but the US dollar itself is starting to flex its muscles because of the strength of the US economy. Plus, at the same time, you have a lot of concerns around the world when it comes to geopolitics and therefore people may be running to the US dollar in order to find a certain amount of support as the US Treasury market comes first in the mind of larger traders as far as hiding your money.

Therefore I think this is a market that will reflect the overall risk appetite of the markets and while the initial reaction has been to see the Nasdaq 100 rally after the jobs number and the US dollar rally eventually we’ll get some type of equilibrium and I anticipate that this market probably goes back to the sideways action that we’ve seen, but it looks like we are entering the next area underneath in order to start more of that same action.

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