The euro fell despite inflation in Europe remaining stable at 5.3% in August. Evidently, the market is much more concerned about today's US Labor Department report, whose forecasts are clearly negative. Although the unemployment rate is expected to remain at 3.5%, only about 180,000 new jobs are expected outside of agriculture. If this forecast comes true, it means that less than 200,000 new jobs have been created for three consecutive months. Given the population growth rate in the United States, over 200,000 new jobs need to be created each month to maintain labor market stability. Therefore, there's a high probability that the unemployment rate forecast won't be met, and it will increase, or will increase in the near future.
This is quite an alarming sign for the dollar. Traditionally, before the release of extremely important data, the market moves in the opposite direction to expectations. The only surprising element in this situation is the lack of an adequate response to the eurozone inflation report, which is also highly important. Most likely, the high rates of consumer price growth in the eurozone essentially confirm European Central Bank President Christine Lagarde's statements that the ECB will continue to raise interest rates. So, the inflation data didn't really bring any new information.
The EUR/USD pair sharply fell after briefly staying above the 1.0900 level. This movement seems speculative, thereby causing an excessive amount of short positions in the short-term timeframes.
On the four-hour chart, the RSI technical indicator crossed the midline 50. This indicates a sharp increase in bearish activity.
On the same time frame, the Alligator's MAs are intersecting each other, indicating a slowdown in the upward cycle.
Outlook
If we go by the euro's oversold conditions, as well as fundamental analysis, we can expect the euro to recover and reach the 1.0900/1.0950 values. However, based on the momentum, if the price stays below 1.0830, the price could return to the base of the downward cycle.
The complex indicator analysis points to a downward cycle in the short-term and intraday periods.
