What began as a dip to test low waters under 1.10 was followed up by a renewed fall. Draghi’s drag is extending towards the NFP, with EUR/USD setting new low after new low, in levels last seen in September 2003 – yes, 11.5 years ago.
But is it about to bottom out? There is some kind of pattern here.
Update: Non-Farm Payrolls + 295K – excellent news  – USD higher
More: EUR/USD breaches low support after the NFP – but could it be false?
In the past few months, the EUR/USD has been clear: down. But as always with forex, it is never a one way street. There are always corrections, some of the “dead cat†nature – minor bounces that are followed by bigger falls.
Where have these bounces happened more often than not? Right after the NFP reports.
Have these NFP reports been that bad? Not at all. Most of them ranged between good and excellent.
The pattern we are seeing here is:
- EUR/USD weakens towards the NFP, regardless of whether an ECB meeting is held that week.
- It sets a new low around the publication.
- From there it bounces on Friday and closes on higher ground.
- On Monday, the pair continues recovering, and this extends during the week.
- Only at a later date, the downtrend resumes.
Will we see it happening again now?
More:Â Trading NFP: How To Sell A Spike In EUR/USD?
In the fresh podcast, we preview the NFP, talk about false breaks, the Australian and Canadian rate decisions, a potential easing in Japan, the widening gap within oil prices and an update on forex brokers after the SNBomb
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