The NFP jobs report on Friday was dire. A miss on the headline print with only 266K jobs added vs expectations of just under 1 million. The unemployment rate was 6.1% vs 5.8% and the important U6 underemployment figure remains above 10%. The US 10 year yields spiked lower in a knee jerk reaction while German bunds remained firm.

Going forward, as long as the German Bund – US10Y spread remains moving higher, expect the EURUSD to follow suit. Investors have been happy to see a recovery for the eurozone which is why German bunds have remained firm even while US 10 year yields drop.

Therefore, it is reasonable to expect EURUSD buyers on pullbacks or breakouts with the descending trend line on the daily chart being a key place to define risk.

Key Trade Risks:

• If the NFP is discounted due to seasonal variations that will invalidate this outlook.
• Any worrying COVID-19 developments in the eurozone will invalidate this outlook.