The EURUSD fell significantly after surprising better than expected NFP and Unemployment rate yesterday. The risk appetite, which I expected to drive the market and bring the pair toÂ further bullish momentum/continuation if we have positive reading of those data, did not happen. The pair dropped sharply hit 1.4153 and closed at 1.4182.
A day before emplyoment data released, Trichet said during ECB press conference on Thursday that â€œ Recent data releases and survey information still suggest that economic activity over the remainder of this year is likely to remain weak â€œ Given such less optimistic economy outlook, actually we have not enough fundamental reasons that should support the Euro significantly. Maybe, this is why we didn’t see the Euro gains on risk appetite after positive NFP and unemployment numbers since investors see no reasons to hold the Euro. In other hand, although US economy recovery also still shaky, the Greenback is likely to have the most advantage being a safe heaven currency.
A look at the daily chart below reveals that we have a case of a false breakout from the range bound area. Technically speaking, usually a false breakout leads to a reversal. At the same time, my daily CCI just cross the 100 line down, supporting potential further bearish pressure in upcoming week. Key support level (also nearest bearish target) is seen at 1.4000 â€“ 1.4050. Break below that area should trigger further bearish sentiment re-testing 1.3750 area. This bearish scenario can only be canceled if we see another bullish movement above 1.4336 area again next week.
Have a great weekend and see you guys next week