A stronger-than-expected Payrolls sent US interest rates and the US dollar higher on the initial reaction to the data. EUR/USD immediately sold down 35 points to within about 15 points of our 1.3555 focus level before embarking on a 75 point tear to a 1.3641 high. I had my finger on the trigger to buy the 55's, but it just wasn't meant to be on this Friday. The US 10-year bond yield is looking to set to make a close in Chicago near the session highs of 5.195% - 5 bps better on the session. Continued higher interest rates will begin to worry the equity bulls as the pace of M&A activity will slow as cost of capital increases. The implications for the USD as a result of higher interest rates should be higher, but a softening equity market as a result of higher borrowing cost could hit the dollar as overseas investors dump US equity holdings and buy back their local currency. For now we will have to wait for the market to tell us which will happen. Technically speaking, the wave count for EUR/USD is still bullish.



Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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