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Thomson Reuters
May 04 - 12:12 PM
EUR/USD - COMMENT-EUR/USD Downside Risk Outweighs NFP Disappointment
First appeared on eFXplus on May 04 - 10:30 AM

Traders are betting downside risks to the euro will outweigh those to the dollar, even after unexpectedly weak jobs data nL1N1SB0J5 nLNS4GEECH pushed U.S. yields lower and tempered Fed rate hike expectations a bit.
EUR/USD erased its initial post-data rise, setting a new trend low after breaking the 61.8 Fib of 1.1553-1.2556 and January's 1.1916 low.
EUR/USD bears remain focused on expectations that Fed and ECB divergence will persist.
Big downside surprises in German April services PMI and euro zone March retail sales bolstered views that the eurozone economy is slowing, heightening expectations the ECB will remain cautious about normalization.
While today's jobs data missed forecasts, U.S. economic growth looks set to outpace the eurozone.
The market hasn't pared rate-hike expectations enough to suggest the Fed will alter its current policy path, maintaining the dollar's yield-spread advantage over eurozone as well as the high cost for shorting the greenback. EUR/USD rallies are likely to be sold going forward as traders are now eyeing December's 1.1718 low.

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Thomson Reuters IFR Markets


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