EURUSD Drops to Weekly Lows After Superb US Jobs Data

US jobs market remains solid

On Friday, data showed that the US economy added 528,000 jobs in July, more than double the average estimate of 250,000 jobs gained (and a six sigma bear), according to the US Nonfarm Payrolls report. The reading from June was revised to 398,000 from 384,000.

In other statistics, the unemployment rate decreased to 3.5%, and the important average hourly earnings, which serve as a proxy for inflation through wages, increased by 5.2% compared to the same month in 2021 and by 0.5% monthly. The Participation Rate also slightly lowered to 62.1%.

From the short-term perspective, the EURUSD pair remains within a sideways channel, with the resistance near 1.0270 and the support near 1.0110. The euro must break from this channel in order to start a new, meaningful trend.

So far, it looks like the break could be to the downside as there are no fundamental reasons to buy the euro. In that case, a breakdown below 1.0110 could send the shared currency toward parity again and possibly attack the actual cycle lows some 50 pips below that level.