The EUR/USD currency pair experienced a day of turbulence on Friday, maintaining a near-term choppy technical pattern as the Euro (EUR) and US Dollar (USD) cycled against each other.
Despite an initial climb to 1.0900 early in the day, EUR/USD faced a downward pull following the release of US Nonfarm Payrolls (NFP), which significantly surpassed market expectations. The January NFP figure soared to 353,000, well above the forecasted 180,000, with a notable upward revision for December from 216,000 to 333,000. This robust performance in the US job market has tempered expectations for swift rate cuts by the US Federal Reserve (Fed), as the domestic economy showcases unexpected resilience.
The year-on-year US Average Hourly Earnings also exceeded expectations, reaching 4.5% compared to the forecasted 4.1%, with a monthly increase of 0.6%, surpassing the predicted 0.3%. The US Unemployment Rate remained steady at 3.7% in January, defying expectations of a slight increase to 3.8%. Additionally, the Michigan Consumer Sentiment Index climbed to 79.0, surpassing the forecasted 78.9 and extending beyond the previous month’s 78.8.
In terms of technical analysis, EUR/USD witnessed a sharp downturn from recent highs, falling below 1.0800 to around 1.0780. The bearish movement on Friday resulted in the currency pair breaking out of the consolidation zone between the 200-day and 50-day Simple Moving Averages (SMA), previously observed between 1.0900 and 1.0850. The pair continues its downward drift in choppy trading, marking a decline of over 3% from December’s peak at 1.1140.
The strong US economic data and the subsequent impact on EUR/USD highlight the ongoing volatility in the currency pair, with market participants closely monitoring economic indicators and the potential implications for future monetary policy decisions.
