Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1700.
- Add a stop-loss at 1.1400.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1395.
- Add a stop-loss at 1.1700.
The EUR/USD bounced back sharply after the US published a weak nonfarm payrolls (NFP) report, pushing Donald Trump to fire the head of the Bureau of Labor Statistics (BLS). It jumped from a low of 1.1395 to the psychological point at 1.1587.
US Nonfarm Payrolls Data
The EUR/USD pair rebounded after the BLS published a weak report. This report showed that the economy created 73,000 jobs in July, missing analysts estimates by far.
Worse, the bureau also downgraded the number of jobs added in June and May by over 200,000. As a result, the economy created an average 35,000 new jobs per month, the lowest increase since the pandemic.
Companies have been in a state of limbo after Donald Trump launched his trade war. While he has reached a trade deal with the European Union, he imposed a 15% tariff that will impact the two economies.
In a statement, Trump said that the numbers were rigged to make him and Republicans look bad. He then went ahead to fire the head of the BLS in an unprecedented action.
Firing the agency’s head means that Trump was forcing traders and investors to lose trust in the economic data. These are important numbers that help the Federal Reserve when making its interest rate decision.
The EUR/USD pair also jumped after Adriana Kugler resigned from her role as a Fed governor. This resignation means that Trump will now have a chance to somewhat reshape the Fed as he pushes it to cut interest rates.
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These actions came after the Fed left interest rates unchanged and maintained its data-dependence. With the labor market softening, analysts expect that the Fed will deliver its interest rate cut in its September meeting.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair bottomed at 1.1395 last week after the Federal Reserve interest rate decision. It then went parabolic after the US published weak numbers.
This rebound happened after the pair formed a doji candlestick pattern, a popular bullish reversal sign. It has now moved above the 50-day and 100-day Exponential Moving Averages (EMA).
The pair has moved above the crucial resistance point at 1.1572, its highest swing on April 21. Therefore, the pair will likely continue rising as bulls target the key resistance at 1.1700. A drop below last week’s low of 1.1395 will invalidate the bullish view.
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