The EUR/USD currency pair tumbled 1.29% on Friday, to close at a 6-month low of 1.074 dollars per euro, after the U.S. Labor Department released the nonfarm payrolls report for October showing 271,000 jobs were added to the economy, while the U-3 headline unemployment rate dipped to 5.0%, from 5.1% in September. Wall Street economists were way off with their forecasts, as the consensus expectations were only for a 180,000 jobs gain with the unemployment rate remaining at 5.1%.

The currency market was already antsy after Federal Reserve Chair Janet Yellen affirmed the Fed's somewhat hawkish stance last Wednesday, when she told the U.S. Congress that a rate hike in December was a "live" possibility, but not a certainty. The Federal Reserve seems determined to hike the rate this year but they admit that the pace of job gains has slowed, according to the policy statement, issued after the FOMC meeting on October 28.

The federal funds futures, traded on the Chicago Mercantile Exchange and commonly used to estimate the market’s views on the likelihood of changes in U.S. monetary policy, indicate 30.3% odds for a quarter-point rate hike and 69.8% odds for a half-point rate hike at the Fed's December FOMC meeting, according to data from the CME Group as of November 6.

European Central Bank (ECB) President Mario Draghi is certainly concerned about the downside risks to growth and the inflation outlook. The European Commission said on Thursday that they cut its eurozone growth forecast to 1.8% in 2016, from a previous projection of 1.9% in May, citing more challenging global conditions and fading impetus from lower oil prices and a weaker euro, according to Bloomberg. The inflation outlook for 2016 also was trimmed to 1.0%, from a previous estimate of 1.5%.

The German Economy Ministry in Berlin said on Thursday that factory orders in Germany, Europe’s largest economy, unexpectedly fell 1.7% in September from the previous month, the third consecutive decrease, missing the median estimate of a 1% gain in a Bloomberg survey. “Manufacturing orders are experiencing a hard time at the moment, which relates primarily to weak demand from outside the euro area,” the ministry said in the statement, according to Bloomberg.

At the Universita’ Cattolica in Milan on Thursday, Mr. Draghi reiterated the dovish comments he made in October, and earlier in the week in Frankfurt, that “concerns over growth prospects in emerging markets and other external factors are creating downside risks to the outlook for growth and inflation.”, according to MarketWatch. Mr. Draghi told the media at the press conference after the ECB Governing Council meeting, in Malta at the end of October, that the bank will re-examine whether to extend its 1.1 trillion euro bond-buying program at its December 3 meeting.

As of November 3, there are 157,029 short positions of euro FX, traded on the Chicago Mercantile Exchange (CME), by leveraged funds, a week-over-week increase of 30,640 short positions. This is compared to about 38,820 long positions, down 4,523 from the previous week, according to the Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) each Friday. During the week ending November 3, hedge funds have increased their net short positions about 35,163 contracts, where euro FX contracts are traded in units of 125,000 euros. 

Technically, the EUR/USD currency pair has been trading in a symmetrical triangle band between the 1.045 and 1.155 dollars per euro levels. In mid-October, the index failed to break out above the 1.14 dollars per euro level, as the ECB was hinting to expand the stimulus program while the U.S. Federal Reserve was preparing the markets for an interest rate lift-off. 

The hedge funds were piling into short positions and took the EUR/USD down below the key technical support level of 1.082 dollars per euro on Friday. In the short-term, the currency pair is moving in the bullish descending broadening (DES/B) wedge, with the next key technical support levels between 1.05 and 1.045 dollars per euro.

Wall Street analysts are debating what direction the EUR/USD should be heading next. Nomura Holdings Inc. has become less bullish on the dollar and changed its estimate for EUR/USD to 1.10 dollars per euro by year-end and 1.06 dollars per euro by June, from a previous call of 1.05 dollars per euro, according to Bloomberg. Barclays, on the other hand, now predicts 0.98 dollar per euro by the end of 2015 and 0.93 dollar per euro by mid-2016, from 1 dollar per euro and 0.95 dollar per euro, respectively. This debate should be coming to an end soon, as both of them could be wrong if the EUR/USD breaks out the 1.14 dollars per euro level.