EURUSD Technical Analysis

The latest NFP report, released last Friday, once again exceeded expectations, extending its impressive winning streak to 14. However, upon closer examination, the report didn't present particularly favourable details. The unemployment rate saw a significant increase from 3.4% to 3.7%, marking the largest month-over-month jump since the pandemic began. Additionally, the average workweek hours showed a slight decrease, which is often an indication that employers may be considering layoffs. All in all, the report contained a mix of information that could be interpreted differently by different individuals.

Moving on to the US ISM Services PMI, it came in much lower than anticipated at 50.3, narrowly missing the threshold for contractionary territory. The employment sub-index reflected a contraction, and the prices paid sub-index experienced a substantial decrease, returning to the levels seen in May 2020. Consequently, the market responded by further discounting the possibility of additional interest rate hikes by the Federal Reserve Federal Reserve The Federal Reserve System, more commonly known as the Fed, represents the central banking system of the United States. Like other central banks globally, the Fed is responsible for monetary policy, in this case in the US.The Fed is one of the most watched and followed entities for forex traders, given its material impact on the US dollar. Founded initially in 1913, the Fed was created to perform a wide range of functions. This includes stabilizing and maintaining flexible monetary policy in the The Federal Reserve System, more commonly known as the Fed, represents the central banking system of the United States. Like other central banks globally, the Fed is responsible for monetary policy, in this case in the US.The Fed is one of the most watched and followed entities for forex traders, given its material impact on the US dollar. Founded initially in 1913, the Fed was created to perform a wide range of functions. This includes stabilizing and maintaining flexible monetary policy in the Read this Term (Fed).

Moreover, recent surprising rate hikes by the RBA and the BoC may have influenced risk sentiment, leading to concerns that the Fed might follow suit. However, it is unlikely given that the Fed typically aligns its actions with market pricing, and we should also consider that the CPI report has not yet been released.

EURUSD Technical Analysis – Daily Timeframe

On the daily chart, the EURUSD seems to be bottoming out at the key 1.07 support level as the price started to range around it and the market priced out hawkish expectations for the June meeting. The bias remains bearish as the moving averages have crossed to the downside and the trend is still downward. The possible double top at the 1.1033 high might indicate that we still have some room to the downside to touch at least the 1.0533 neckline, but watch out for the price action in the following days and after the CPI and FOMC next week.

EURUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, the price has broken out of the falling channel as it started to range around the 1.07 support. The resistance at 1.0760 stalled the rally after some Fed members hinted to a pause in June. The selloff that came soon after was caused by the NFP report, but as we mentioned previously, it wasn’t such a great deal and the EURUSD restarted its rangebound price action.

EURUSD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a little box here where the EURUSD got stuck since the start of the week. A breakout on either side may trigger some big moves but the levels to watch should be the 1.0760 resistance and the 1.0635 support. If the buyers manage to break above the resistance, then we may see the rally extending towards the 1.0845 level. On the other hand, if the sellers manage to break below the support, we should see EURUSD trading at 1.0533 soon after.

The US Jobless Claims report is the event to keep an eye on today in terms of risks, but its impact on the market is not expected to be significant unless there are major deviations from the expected number:

• If there is a significant beat in the report, it could trigger some hawkish expectations from the market as inflation may remain stuck at a higher level due to a tight labour market.
• Conversely, if there is a significant miss in the report, the market should validate the Fed’s neutral stance and, barring a hot CPI, may even price in the end of the hiking cycle.