The EUR/USD pair experienced a sharp decline to 1.0820 on Friday, as the latest US Nonfarm Payrolls (NFP) report revealed stronger-than-expected labor demand and wage growth. The report showed a significant increase in new payrolls, exceeding expectations and previous figures. Additionally, the unemployment rate rose to 4.0%, while average hourly earnings accelerated to 4.1% year-over-year.

Market Movers: Stronger US Jobs Data and ECB Rate Cut

The robust NFP data has significantly impacted market expectations regarding the Federal Reserve’s (Fed) monetary policy trajectory. The likelihood of a rate cut in September has diminished, as the strong labor market indicates a resilient US economy.

Conversely, the Euro weakened after the European Central Bank (ECB) delivered a widely anticipated interest rate cut of 25 basis points on Thursday. Despite the cut, ECB President Christine Lagarde emphasized that the fight against inflation is ongoing and that the bank will remain data-dependent.

Technical Analysis: EUR/USD Faces Uncertain Outlook

The EUR/USD pair faces an uncertain near-term outlook following its sharp drop to the 50-day Exponential Moving Average (EMA) at 1.0812. The pair failed to break above the neckline of an Inverted Head and Shoulder (H&S) pattern, which could have signaled a bullish reversal.

A break below the 200-day EMA at 1.0800 could trigger further downward momentum for the pair. Conversely, a recovery above the 1.0900 resistance level could pave the way for the pair to test the March 21 high at 1.0950 and potentially reach the 1.1000 psychological resistance.