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EUR/USD ends weeks sharply lower after NFP weakens case for larger Fed rate cuts

2019-07-06 03:00    OctaFX
  • US Dollar jumped on Friday, following the US employment report that diluted Fed’s case for lower rates. 
  • Euro suffers worst week against the US Dollar since March. 

The EUR/USD pair bottomed on Friday at 1.1205, the lowest level in two weeks. The area above 1.1200 offered support to the pair that tumbled following NFP.  

The employment report came in better than expected and lowered expectations of rate cuts from the Federal Reserve in July. Job numbers also pushed US yields to the upside, and equity prices lower. The greenback jumped across the board. The DXY is up 0.56%, at 97.30, on its way to the highest close since June 18. 

On Friday EUR/USD added to weekly losses. On Monday, it dropped following the agreement between the US and China to resume trade talks. After moving sideways during three days around 1.1280, broke to the downside and tumbled. As of writing trades at 1.1220, 150 pips below the level it had a week ago. So far its the worst weekly performance for the Euro since March. 

Next week monetary policy will likely continue to be a key driver. The Fed and the ECB will publish the minutes of its latest meeting. Also, Powell will deliver its semi-annual testimony at Congress. 

From a technical perspective, the weekly chart showed EUR/USD back below the 20 SMA and back to a previous lower range. Last week, it traded above 1.1400, those days are behind, and the outlook now appears to have turned to the downside. A recovery above 1.1330 could strengthen the Euro while to the downside, the next key support might be seen at 1.1180. 


 

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