The US dollar index rebounded nearly 1% after the release of nonfarm payroll numbers on Friday.

The figure showed 209k new jobs were created in the previous month, beating the consensus forecast of 183k. The unemployment rate also dropped to 4.3%, and wage growth remains robust at 2.5%. The jobs data painted a stable picture of labour-force strength, resulting in a surge in the likelihood of a rate hike in December. The current probability of a December rate hike, according to the CME Group’s FedWatch tool, climbed from 42% to 47% a day ago. 

EUR/USD retraced from its recent high after hitting the 161.8% Fibonacci retracement level at 1.185, which serves as an immediate resistance level. Some support can be found at the 138% Fibonacci retracement level at 1.177. The momentum indicator MACD is likely to form a bearish crossover if the price slides down further. Breaking down the key support level of 1.172 will lead to further downside and potential trend reversing. 

Investors’ confidence was boosted by the jobs data, and US indices finished broadly higher. Separately, the robust earnings season remains a key driver of the stocks markets these days. So far, 420 of the S&P500 companies have announced quarterly earnings, and nearly 80% of their profits have beaten analysts’ forecasts. Improving earnings helped to justify the relatively high valuation of the stock markets. A weaker US dollar also painted a brighter picture of US exports and MNC’s earnings in the months to come. 

Technical analysis:

EUR/USD

  • The SuperTrend (10, 1.5) and 10-Day Simple Moving Average sloped upwards
  • The price retraced at the 161.8% Fibonacci level and found some support at the 138% level
  • The momentum indicator MACD is likely to form a bearish crossover if the market continues to head south

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