- EUR/USD’s rally stalled on the back of a strong US labor market report, although the pair remained well supported above 1.1400.
- The pair is currently trading around 1.1450.
- EUR/USD remains on track to end the week up 2.8%, its best performance since March 2020.
Strong US labor market data on Friday took some of the wind out of the sails of the EUR/USD and while not enough to trigger a lasting reversal towards 1.1400, it has at least prevented the pair from breaking past January highs of 1.1480. In fact, though the pair recovered from its post-NFP session lows at 1.1420 and has failed to recover to pre-data levels above 1.1460.
Against the backdrop of a sharp rise in US yields, as bond markets price in a greater likelihood of a more aggressive Fed tightening and higher rate, a slowdown in the EUR/USD rally on Friday makes sense. It currently trades at 1.1455, gaining 0.2% on the day. For the week, the pair looks set to gain around 2.8%, its best performance since March 2020.
Some might find it surprising how enthusiastically EUR/USD bulls bought the post-NFP data drop to 1.1400. Others might argue that it demonstrates the strength of the change in market sentiment on the euro in the wake of Thursday’s ECB meeting. ECB President Christine Lagarde on Thursday acknowledged rising inflation risks in the eurozone and refused to repeat an earlier statement that rate hikes in 2022 were unlikely. Market participants interpreted this to mean that, for the first time, the ECB was admitting that hikes this year are a possibility, a “fundamental” change according to some.
Eurozone money markets surged to trade up to 50bps of rate hikes at the end of December (from around 20bps earlier). While this might be an exaggeration, the fact that the ECB is clearly leaning towards rate hikes in 2022 (the first time in a decade) is quite significant. While the ECB’s reversal of stance might not be enough to result in a lasting rally in EUR/USD, say, beyond resistance between current levels and the 1.1500 level, it does make it less likely that it will return below 1.1200. After all, the divergence between Fed and ECB policy now may not be as wide as some had previously thought.
Additional technical levels
EUR/USD
| Panorama | |
|---|---|
| Last Price Today | 1.1455 |
| Today’s Daily Change | 0.0024 |
| Today’s Daily Change % | 0.21 |
| Today’s Daily Opening | 1.1431 |
| Trends | |
|---|---|
| 20 Daily SMA | 1.1324 |
| 50 Daily SMA | 1.1313 |
| 100 Daily SMA | 1.1432 |
| 200 Daily SMA | 1.1681 |
| levels | |
|---|---|
| Previous Daily High | 1.1451 |
| Previous Daily Minimum | 1.1268 |
| Previous Maximum Weekly | 1.1347 |
| Previous Weekly Minimum | 1.1121 |
| Monthly Prior Maximum | 1.1483 |
| Previous Monthly Minimum | 1.1121 |
| Daily Fibonacci 38.2% | 1.1381 |
| Daily Fibonacci 61.8% | 1.1338 |
| Daily Pivot Point S1 | 1.1315 |
| Daily Pivot Point S2 | 1.1199 |
| Daily Pivot Point S3 | 1.1131 |
| Daily Pivot Point R1 | 1.1499 |
| Daily Pivot Point R2 | 1.1567 |
| Daily Pivot Point R3 | 1.1683 |
Source: Fx Street
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