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EUR/USD Faces More Pessimism

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EUR/USD continues to fall this week
POSTED BY:
Eddy

DATE:
09/05/2014

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The recent rate cuts by the ECB (European Central Bank) was relatively unexpected as lending rates were reduced to 0.05%, deposit rates down to 20% and the refi rate to 0.30%. From a technical perspective, the currency pair has been plummeting since yesterday, generally reflecting the market sentiment. On the daily chart, a slow downward crawl over the last few weeks has amounted to a bearish break out and is now at a multi-year uptrend support line. From the USD perspective, there were no good news for the Euro yet again. The ISM Non-Manufacturing PMI reached the highest in 9 years. Will we see a trend reversal? Probably not until we receive some positive fundamental data.

Reuters has today reported a pick up in the growth rates of the US Job Market. This is backed up by analysis as Economists predicted a non-farm payroll increase of 225,000 since last month. The government is also at a consensus since it reported last month that the economy will add 209,000 jobs in July. Overally growth projections are in the positive as third-quarted growth estimates are as high as 3.5% annual rate. The Federal Reserve is still a little sceptical about these facts given slow wage growth, and an increased number of part-time jobs despite the fact that most people want full time employment.

The overall juxtaposition between the bullish US economy and the bearish European economy is an indication of the continued downward movement of the EUR/USD.

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