EURUSD Drops to Weekly Lows After Superb US Jobs Data

By Peter Bukov|

Published: August 05 2022, 15:21 GMT+0

EURUSD Drops to Weekly Lows After Superb US Jobs Data

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The greenback advanced broadly today, supported by the latest data released, sending the EURUSD pair below 1.0160. US yields also accelerated higher, helping the USD strengthen.
As of writing, the 2-year yield was at 3.25%, the highest in three weeks, while the 10-year yield advanced to 2.85%.

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.