NFP aftermath: EUR/USD surge pass 1.1300 level with ease

Led by a rigorous bout of short-covering on the back of a huge miss on the headline NFP number, the EUR/USD pair reclaimed 1.1300 with ease and surged to nearly 3-week high level of 1.1333 before cooling off a bit to currently trade around 1.1310.

The EUR/USD bears rushed to cover their short positions after the US Labor Department report that the economy added a meager 38,000 new jobs in May, marking the smallest rise since the fall of 2010. Surprisingly, the unemployment rate fell to 4.7% from 5%, which was primarily because of a large number of people leaving the labor force. Meanwhile, the Average Hourly Earnings matched expectations and rose by 0.2% MoM.

Adding to the disappointment, readings for the prior two months were also revised lower that further assisted the EUR/SUD pair to extend the bullish momentum. 

The CME Group's Fedwatch tool has now fallen to show only 6% probability of a Fed rate-hike in June.

Technical outlook

"The 1 hour chart shows that the technical indicators head north vertically, as the price moved 100 pips above its moving averages. In the 4 hours chart, the technical indicators also head sharply higher as the price broke above its 20 and 100 SMAs. The pair has an immediate support now around 1.1235, where the 20 and 100 DMAs converge in the daily chart. As long as above the level, the pair has scope to extend its gains, up to the 1.1350 region later today."

"Support levels: 1.1235 1.1200 1.1160
Resistance levels: 1.1310 1.1350 1.1390"