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Euro, Pound Continue Rally after NFP News


The US created 215K new jobs in July, whilst the unemployment rate stood steady at a 7-year low of 5.3%. Wages posted a tepid advance, up 2.1% from a year early, missing expectations but in line with the quarterly wages report released a week before. Market initially bought the greenback, but the lack of follow through in dollar’s rally triggered some profit taking with mixed results across the board.

As for the EUR/USD the pair surged by the end of the day, closing the week flat around the 1.0970 level. The daily chart shows that the technical indicators are aiming slightly higher in neutral territory, lacking directional momentum at the time being, whilst the price stands above a horizontal 20 SMA.

The short term technical picture, according to the 4 hours chart, presents a positive tone, although the technical indicators are losing their upward momentum well above their mid-lines.

eurusd 10

The 20 SMA holds flat around 1.0900, while a daily descendant trend line, coming from 1.1435, stands today around 1.1045, acting as a strong resistance level in the case of an extension beyond the 1.1000 figure. Should the price ease below 1.0950 on the other hand, the pair can test the mentioned 20 SMA around 1.0900.

The British Pound closed the week below the 1.5500 level for the first time since early June against the greenback, weighed by the latest BOE’s economic policy meeting result, as only one out of the nine MPC members voted for a rate hike.

Also, Britain’s inflation report showed that they lowered their inflation forecast in the near term, spooking those pricing in the soon to come rate hike announced during July. The pair closed the week with a clear bearish tone in its daily chart, as the price has extended further below a bearish 20 SMA whilst the technical indicators head sharply lower below their mid-lines.

gbpusd 10

Shorter term, the 4 hours chart is also presenting a strong bearish tone, with the 20 SMA extending below the  200 EMA and the technical indicators maintaining their sharp bearish slopes near oversold levels. The pair bottomed around 1.5420 on Friday, now the level has to be broken to confirm a new leg lower.

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