EURUSD: gearing up for FOMC
The non-farm payrolls figures were in the market focus during the previous week, when macro data are in question. Surprisingly, they have been increased to the level of 272K, in May, much higher from the market expectations of 185K, and from 165K posted for the previous month. The unemployment rate in the US reached the level of 4% in May, from 3.9% for the previous month and as forecasted by the market. The US ISM Manufacturing PMI dropped a bit in May to the level of 48.7 from 49.6 forecasted by the market. The ISM Services PMI in May was a bit better than expected at level of 53.8 from 50.8 expected by the market.
The ECB started pivoting, as announced at their previous meeting. The interest rate has been cut by 25 bps to the level of 4.25%. When it comes to question whether there will be further rate cuts, the ECB members will remain focused on the data, and will pivot further if the data show clear signs of decreasing inflation. Third estimate of the GDP Growth rate for Q1 showed no change from previously posted, and remained at the level of 0.3% for the quarter and 0.4% on a yearly basis. The unemployment rate in Germany remained steady in May at a level of 5.9% same as previous month and in line with market expectations.
During the week the eurusd pair continued to move within the relatively short range, between 1.083 and 1.091. However, Friday`s jobs data brought some breakthroughs and a strong move of the currency pair from 1.09 down to 1.08. The RSI also reacted by reaching the level of 46, indicating that the market has clearly turned its view toward the oversold side. Moving averages of 50 and 200 days continue to move as two parallel lines with a short distance. Still, there is no indication of a potential cross.
The market made its move on Friday, pricing increased unemployment rate to 4.0%, which was more or less, in line with Fed`s macro projections. This was a signal to the markets on increasing probability that the Fed might start pivoting during the course of this year. In this sense, eurusd was pushed toward the 1.08 support line. It should be taken into consideration that the FOMC rate decision is scheduled for Wednesday, which might bring some increased volatility back on the market. At this point the question is whether the currency pair might go lower from current levels? Charts are pointing to some short term reversal, but not too much higher from current levels. The target might be around 1.085, but the 1.08 support line will be tested during the week ahead. On a longer time scale, the support at 1.067 is indicated as a next target of the eurusd pair, however, it will take some time until the currency pair reaches this level, because first 1.07 should be tested, before the next move to the downside.
Important news to watch during the week ahead are:
Euro: Inflation rate final in May for Germany,
USD: Inflation rate for May, FOMC interest rate decision and economic projections, PPI for May, Michigan Consumer Sentiment preliminary for June.
The ECB started pivoting, as announced at their previous meeting. The interest rate has been cut by 25 bps to the level of 4.25%. When it comes to question whether there will be further rate cuts, the ECB members will remain focused on the data, and will pivot further if the data show clear signs of decreasing inflation. Third estimate of the GDP Growth rate for Q1 showed no change from previously posted, and remained at the level of 0.3% for the quarter and 0.4% on a yearly basis. The unemployment rate in Germany remained steady in May at a level of 5.9% same as previous month and in line with market expectations.
During the week the eurusd pair continued to move within the relatively short range, between 1.083 and 1.091. However, Friday`s jobs data brought some breakthroughs and a strong move of the currency pair from 1.09 down to 1.08. The RSI also reacted by reaching the level of 46, indicating that the market has clearly turned its view toward the oversold side. Moving averages of 50 and 200 days continue to move as two parallel lines with a short distance. Still, there is no indication of a potential cross.
The market made its move on Friday, pricing increased unemployment rate to 4.0%, which was more or less, in line with Fed`s macro projections. This was a signal to the markets on increasing probability that the Fed might start pivoting during the course of this year. In this sense, eurusd was pushed toward the 1.08 support line. It should be taken into consideration that the FOMC rate decision is scheduled for Wednesday, which might bring some increased volatility back on the market. At this point the question is whether the currency pair might go lower from current levels? Charts are pointing to some short term reversal, but not too much higher from current levels. The target might be around 1.085, but the 1.08 support line will be tested during the week ahead. On a longer time scale, the support at 1.067 is indicated as a next target of the eurusd pair, however, it will take some time until the currency pair reaches this level, because first 1.07 should be tested, before the next move to the downside.
Important news to watch during the week ahead are:
Euro: Inflation rate final in May for Germany,
USD: Inflation rate for May, FOMC interest rate decision and economic projections, PPI for May, Michigan Consumer Sentiment preliminary for June.
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