EUR/USD rallied to a two-session high of 1.1586 on Friday after a downside surprise in September non-farm payrolls nL1N2R32KU initially drove U.S. rates and the dollar lower, but the euro's pullback from the peaks showed it remained vulnerable as investors were still expecting the Fed to advance toward tapering.
The 10-year yield US10YT=RR fell below 1.56% after the data but reversed and rallied to a fresh 4-month high.
Eurodollar EDU2EDZ2 prices rallied sharply, but gains fizzled with an initial rate hike still seen in late 2022 nL1N2R412B.
After EUR/USD's rally hit a wall, price action suggested consolidation of losses from the Sept.
3 daily high will be ongoing.
Consolidation is likely a bearish signal as the phase allows the market to digest big moves before resuming its current trend.
Monthly technical reinforce the downside view.
A long upper wick is in place on October's monthly candle and monthly RSI implies downward momentum is in place.
A rally above the 1.1660/1.1710 zone is needed to damage the down trend.
If that fails to occur the 1.1490/1.1500 zone, where 1.1500 barriers and the 50% Fib of 1.0636-1.2349 sit, is likely.
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