The EUR/USD pair plummeted for a third week in a row, down to 1.0703 this Friday, amid a shockingly positive US employment report. Ending the week at levels not seen since late April and below the 1.0800 level, the pair seems to have set the tone for the rest of the year, or at least, until the December FED's meeting, as all of the ongoing dollar's strength is based on speculation that the US Central Bank will raise its rates then.
The US managed to add 271,000 new jobs in October, whilst the unemployment rate fell to 5.0% its lowest in seven years, and wages rose beyond expected. Dollar's bulls couldn't ask for any better from the Nonfarm Payroll report. Neither can those who believe that the FED will trigger the so-long awaited lift off this December. At this point, no one is asking if such dollar strength is actually negative for the US economy, as it will likely maintain inflation subdued. And as commented on the NFP preview, the main concern of almost all Central Banks worldwide is precisely that, low inflation.
View the Live chart of the EUR/USD
Anyway, the dollar is back the king, and fighting the trend these days, is useless. The longer term picture has turned strongly bearish, as the weekly chart shows that the price accelerated its decline below its 20 SMA, whilst the technical indicators head strongly south below their mid-lines. In the daily chart, the technical indicators head sharply lower in oversold territory, while the 20 SMA has crossed below its 100 SMA and is about to break also below the 200 SMA, all of which supports a continued decline. The pair has a support around 1.0660, where it posted several daily lows earlier this year, and a break below it should lead to a retest of the year low, 200 pips lower at 1.0461, in the upcoming weeks.
Advances up to the 1.0840 region, the base of these last months' range, will be seen as selling opportunities. Given the extreme oversold readings present also in the shorter term, the pair can extend above this region, and rally up to 1.0960, where another bout of selling waits, and still unable to harm, the dominant bearish trend.
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