As shown in today’s EUR/USD chart, the euro has dropped below the 1.100 level against the US dollar. This decline is partly due to Friday’s strong US jobs report, which revealed:
→ the largest job growth in six months,
→ a decrease in the unemployment rate,
→ solid wage growth.
These factors suggest a resilient US economy and increase the likelihood of a “soft landing” following the inflation surge.
Technical analysis of the EUR/USD chart:
→ Since July, price movements have formed an ascending channel (shown in blue), but it now faces the immediate threat of a bearish breakout after sellers prevented the price from rising above 1.12.
→ The psychological level of 1.10 could shift from support (indicated by an arrow) to resistance.
Note that Friday’s decline was rapid, and it’s possible that the downward momentum could continue into this week.
On the other hand, bulls still have a chance to regain control at the lower boundary of the channel (which could trigger a rebound). If they fail to do so, traders should be prepared for the emergence of a potential downward channel on the EUR/USD chart (its possible outline is shown by red lines).
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