EUR/USD: Euro stays above 1.05 after a choppy Friday

The single European currency remains firmly above the 1,05 level in the first trading hours of the new week having retreated slightly from the highs of 1,0580 that marked during the Asian zone.

Friday was a tumultuous day in trading as there was sharp volatility in both directions following the US new jobs announcement which surprised analysts as it rose to 263,000 from the 200,000 expected.

The initial reaction was a sharp drop for the Euro, almost 100 basis points in just the first minutes of the announcement with the pair pulling back from the 1,0540 levels to the 1,0440. 

However, the US currency was unable to maintain the gains and the temporary positive momentum, with the result that the exchange rate returned relatively soon above the level of 1,05 again, where it remained until the closing of the week.

As I mentioned in Friday's article i was giving a high probability that the US currency would return to some gains which was partially confirmed.

While the strong jobs news created this outlook, wiping out all the gains in such a short period of time was unexpected and surprised me.

Apparently the market was not convinced by the latest development and remains quite cautious about the next Fed's decision for interest rate hike for which the probabilities give more than 80% that Fed will decide for 50 basis points and not by 75 which was the most likely a few weeks ago.

The start of the new week have quite a rich calendar of macroeconomic announcements with retails sales in the Eurozone and manufacturing and services price indices in Europe and the US being awaited with particular interest by investors.

It would be a some surprise for me if all the economic data continues to support the European currency so that it can maintain current levels and create prospects for a further rise.

Although the possibility of seeing some new peaks is still exist , I would not hold positions in favor of the European currency at these levels and would expect some new dips.

A rich agenda of announcements could again provide a high volatility with the pair remaining susceptible to corrections in favor of the US currency.