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Forex pairs in this Article » EUR/USD
FXstreet.com (Barcelona) - The sharp fall in EUR/USD after the unexpected ECB rate cut/dovish press conference indicates the market was, again, caught on the wrong foot, prove of that being the 2c+ collapse in the exchange rate before correcting.

Market taken by surprise

As Peter Whitley from IFR Markets notes: "EUR/USD's 1.5% collapse after the ECB rate cut/Draghi press conference suggests the market was incorrectly positioned despite a bearish environment with everyone keen to sell (EUR) rallies. The majority of the market thought the ECB would cut, but not this month. Yet the ECB's inflation mandate is concrete & symmetrical."

EUR/USD corrects over-extension

The EUR/USD has seen a meritorious 61.8% fibo comeback from the latest sell-off on Thursday though, on combination of ACB (Asian Central Bank) buying paired with position adjustment as traders don't want to over-commit ahead of the NFP number. Whether a bearish resumption of the trend manifest before the week ends or not, it will depend on the payrolls outcome now.

Is EUR/USD heading towards 1.30? NFP to have a say...

While the market was somewhat reluctant to pay much attention to the NFP number due to altered data on the US shutdown, the fact that a leading indicator such as the Non-Manufacturing ISM came upbeat earlier on the week, suggests, according to Whitley, that "if payrolls comes in at the upper end of forecasts (consensus f/c 125k), the divergence between the US and EZ economies (and monetary policy time-frames) will surely be enough to send EUR/USD back towards 1.30 and possibly below."
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