The ECB was none committal about further rate cuts following its move to cut rates Thursday, the first time in 5 years. The US jobs data meanwhile suggested wage inflation, an expanding labor force, and jobs, elements which are likely to deter the Fed from taking action on rates anytime soon. Given this it could be sometime before the rate differential gets narrowed with chance pointing towards a further widening. This to us suggests weakness for the Euro moving forward.
Resistance
- 1.08275 – Intraday Consolidation Low
- 1.07978 – Daily Consolidation Low
- 1.07788 – 50D Moving Average
Support
- 1.07601 – Intraday Consolidation Low
- 1.07341 – Intraday High / Low
- 1.06901 – Intraday Consolidation Floor
EURUSD opened with a downside gap following Friday’s sharp response to a strong US jobs data. We are now under the 50D Moving Average with earlier attempts to cover the gap likely to fail suggesting a follow through drop is in the works. We have daily stochastic poised to push oversold inline with the consolidation breakout, while intraday we will be expecting oscillators to crawl in oversold areas. Look for a break of 1.07601 to signal the start of the next down leg and as an excuse for re entering the sell side. Note we could be seeing the start of a move towards the years lows.
