Euro Continues Decline Following NFP Report Amid French Snap Election News

The Euro opened significantly lower on Monday, hitting a one-month low and extending Friday’s 0.8% decline, which was the largest single-day loss since April 12.

This drop in the Euro was influenced by much higher than expected US nonfarm payrolls data, which raised expectations that the Federal Reserve might keep interest rates unchanged for an extended period (the FOMC is meeting this week, with most economists predicting the first rate cut in November), thereby strengthening the dollar.

Additionally, the surprise results of the EU parliamentary election and French President Macron’s decision to call a snap parliamentary election added to the Euro’s pressure in early Monday trading.

The technical outlook for the Euro weakened significantly on the daily chart as it lost the critical 1.0800/1.0790 support zone (a psychological level, 38.2% Fibonacci retracement of the 1.0601/1.0915 range, daily cloud top, and the former higher low from May 30). This loss completed a failure swing pattern on the daily chart, generating a negative signal.

Daily moving averages turned bearish, and strengthening negative momentum added to the near-term bearish outlook. Monday’s drop broke through the 50% retracement of the 1.0601/1.0915 uptrend, suggesting a possible decline below the 1.0700 mark.

Meanwhile, partial profit-taking after the sharp fall cannot be ruled out, with the 1.0800/20 zone (now a solid resistance) expected to cap any upticks and offer better levels for re-entering the bearish market.

Res: 1.0785; 1.0820; 1.0841; 1.0889
Sup: 1.0747; 1.0721; 1.0700; 1.0675