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EUR/USD tumbled in late trading, yet printed 0.61% gains for the week

  • EUR/USD hovers around 1.0900 after hitting a low of 1.0876.
  • US Nonfarm Payrolls rose below forecast but cemented the case for a 25 bps Fed rate hike.
  • ECB’s Knot: Further rate hikes need, and no rate cuts in 2023.

The EUR/USD falls during the North American session and retraces towards the 1.0900 figure after a solid US Nonfarm Payrolls report. However, the Euro (EUR) is set to finish the week with decent gains of 0.61%, though it ended short of reclaiming 1.1000. At the time of writing, the EUR/USD is trading at 1.0910, below its opening price by 0.07%.

EUR/USD clings to 1.0900 on mixed US jobs data

The US economic docket featured March’s jobs report, revealed by the US Department of Labor. Payrolls rose below estimates of 240k and hit 236K, but the data insights triggered a jump in odds for a US Federal Reserve’s (Fed) 25 bps rate hike. The Participation Rate jumped to 62.6%, from 62.4% foresaw, and the Unemployment Rate remained unchanged at 3.6% YoY. Average Hourly Earnings fell to 4.2% annually basis, beneath the consensus.

Therefore, US Treasury bond yields extended their gains, with the 2-year US T-bond yield, the most sensitive to interest rates, climbing 16 basis points. The Fed swaps are repricing the May monetary policy meeting, with odds for a 25 bps rate hike by the US Federal Reserve itching up, to 67.0%, compared to Thursday’s 49.2%, as shown by the CME FedWatch Tool.

Even though the European (EU) economic docket was absent, Klas Knot, an European Central Bank (ECB) Governing Council Member, had crossed the wires. Knot commented the ECB is not done with interest rate hikes, as core inflation remains at 6%, three times the ECB’s 2% target.

“The only question is whether you still need to take a further step up by half a percentage point, like the last few times we raised rates, or can you already scale back to smaller increments of a quarter of a percentage point,” he said.

When asked about cutting rates towards the year’s end, Knot described such a scenario as “almost impossible.”

Meanwhile, Worldwide Interest Rate Probabilities (WIRP) show odds for a 25 bps rate hike by the European Central Bank at 90%. Following that, another 25 bps rate increase is expected, and no movement for Q4.

What to watch?

The EU’s docket will feature Retail Sales, Industrial Production, Germany’s inflation, and a round of ECB speakers throughout the week. On the US front, the calendar will feature the Consumer and the Producer Price Index (CPI/PPI) for March, the FOMC’s last meeting minutes, Jobless Claims, and Retail Sales on the data side. The Fed parade will continue during the week.

EUR/USD Technical Levels

EUR/USD

Overview
Today last price1.0911
Today Daily Change-0.0012
Today Daily Change %-0.11
Today daily open1.0923
 
Trends
Daily SMA201.079
Daily SMA501.0734
Daily SMA1001.0674
Daily SMA2001.035
 
Levels
Previous Daily High1.0938
Previous Daily Low1.0884
Previous Weekly High1.0926
Previous Weekly Low1.0745
Previous Monthly High1.093
Previous Monthly Low1.0516
Daily Fibonacci 38.2%1.0917
Daily Fibonacci 61.8%1.0905
Daily Pivot Point S11.0892
Daily Pivot Point S21.0862
Daily Pivot Point S31.0839
Daily Pivot Point R11.0946
Daily Pivot Point R21.0968
Daily Pivot Point R31.0999
 

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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