Last Friday’s NFP report disappointed. The US economy added much fewer jobs in April than the market expected, so the dollar was sold across the board.
The funny thing is that the dollar traded with a weak tone well before the NFP report. The higher stocks/lower dollar theme is the dominant one in the last several weeks, so one may say that the NFP report did not have a significant impact on the markets.
The EUR/USD pair says it all. It bounced from 1.17 at the start of April and did not look back ever since. The 1.20 level remains key in the near future, as the pair struggles now at dynamic resistance.
Inflation is due later this week, and investors expect to see higher levels in the US CPI data. If the data comes out much weaker than expected, then the EUR/USD pair may take out resistance.
EUR/USD Technical Analysis
Bulls may want to take partial profits at current levels, as the pair struggles with dynamic resistance. With no important economic data ahead, the market participants may want to sell short the EUR/USD pair at 1.2070 area with a stop at 1.2150 and target a move back below 1.20.
Dow Jones ended 2.32% higher at 25,595 after the index tested and bounced from the 50-day moving average. The index rejected several times the last two weeks at the 200-day moving average. The short term picture has improved after yesterday’s gains, but the long term outlook remains bearish below the 200-day moving average.