EUR/USD

Nonfarm payrolls increased 209k last month after surging by 298k in June. The reading was below our expectations (220k) and median market forecast (235k). Data for May and June were revised to show a total of 15k more jobs created than previously reported.
Average hourly earnings rose only one cent. The Fed is closely monitoring the data on average hourly earnings as a measure of slack in the labor market. It is worth mentioning that the Fed officials on Wednesday cautioned that significant slack remained and that is why patience in expecting rate hikes is needed.
Unemployment rate rose in July to 6.2% from 6.1% in June.
After the return of the EUR/USD to 1.3433 after weaker-than-expected Nonfarm payrolls data we are short again on this currency pair with the target of 1.3335 and stop-loss at the level of 1.3480. In our view the EUR/USD is likely to retest the new 2014 low at 1.3366 soon.
The EUR/USD weakness is unlikely to last over the medium and long-term horizon. We see that money markets have almost priced in a first rate hike in the USA next summer. Releases of industrial production data in Italy, Germany and France could be important for the EUR next week. In our opinion some better readings are possible after disappointing figures from the previous month. The biggest risk for the EUR comes from the uncertainty about the implications of sanctions on Russia.
The ECB will hold its monetary meeting next week. We do not expect any major changes in the rhetoric. The ECB may however point to geopolitical risks and intensifying uncertainty affecting some sectors of the euro zone real economy.

Significant technical levels:

Resistance: 1.3437 (10-dma), 1.3444 (high July 29), 1.3475 (high July 25)

Support: 1.3366 (low July 30), 1.3359 (low November 12, 2013), 1.3345 (low Nov 11, 2013).

AUD/USD

We have to consider risk of verbal intervention by RBA officials who may again express their uneasiness about the strength of the AUD in the statement next week. The RBA is expected to keep rates unchanged and is likely to reiterate the most of the July minutes.
Our strategy for AUD/USD is to get short on a retest of recent lows near 0.9330, which after breaking them are resistance levels now. Our target will be near May lows of 0.9210. In our opinion the outlook for AUD/USD is bearish and breaking above 0.9400 is less probable scenario.

Significant technical levels:

Resistance: 0.9331 (high July 31), 0.9388 (high July 30), 0.9416 (high July 29)

Support: 0.9280 (low July 31), 0.9257 (low June 5), 0.9229 (low June 3)

Our current trading positions:

EUR/GBP: long at 0.7920, target 0.8020, stop-loss 0.7875.

EUR/USD: short at 1.3433, target 1.3335, stop-loss 1.3480.

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