Published on 09.08.2021 08:58

The Euro, as well as all other major currencies took a big hit against the US dollar in last Friday’s trading session following a much better than expected US Nonfarm Payrolls report and jobless rate which once again put a reduction of monetary stimulus by the Fed back in the spotlight. 

The US added 943K new jobs in July versus analysts’ expectations for a figure of 870k, while the Unemployment rate fell to 5.4% against market predictions for a number of 5.7%. Two other key figures, namely the Underemployment Rate shrank to 9.2%, while the Labor force participation Rate jumped to 61.7%. The stellar job figures cannot be ignored by the US Federal Reserve and many in the market now believe they will have to tighten its monetary policy starting as soon as this year.

Also not helping the Euro’s cause was the release of industrial production figures from Germany which hit the market at -1.3% versus market expectations for a figure 0.5% which were followed up by this mornings release of trade balance export figures from the Eurozone’s biggest economy which both came in above expectations but were of little help for the Euro.

The Eurozone economic calendar is relatively quiet this week with the only interest likely to be the release on Tuesday of the ZEW economic sentiment index from Germany which means news from the US such as the CPI figures on Tuesday followed by the Producer Price index numbers on Wednesday are likely to be the main drivers of the EUR/USD currency pair.

The EUR/USD currency pair broke down through a significant resistance level after the release of the NFP numbers on Friday and continues to remain there as we enter today’s European trading session.

The 4.5 month low of $1.1703 reached near the end of March is now definitely in focus and will probably be decided by the release of the CPI figures from the US on Tuesday.

A break of this next critical resistance level will see the European currency flirting with a 9.5 month low last reached at the end of October last year