In one fell swoop the greenback managed to reverse what was shaping up to be a terrible week, on the back of an NFP number that was seen as in line with expectations and an ECB seemingly on hold following the 25 bps increase. EUR/USD opened the week near 1.5790 and looked poised to break through 1.5800 in earnest, a level it had not closed above since late April. Even the 1.6000 area seemed within reach as EUR/USD crossed above 1.5900 just ahead of the simultaneous ECB press statement/US NFP release. It was not to be, however, as the NFP report was deemed to be in line with consensus (we argue it was worse below) while Trichet was interpreted as telling the market that the ECB is on hold. EUR/USD shot down quickly following Trichet's comments and was sitting more than 200 pips lower at 1.5690 just hours later. Given other market developments we believe this move was likely overdone.  Full text »

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