EUR/USD Heading towards 1.095?
Current Situation
EUR/USD has shown signs of losing traction but remains above the 1.0800 level after peaking above 1.0840, its highest in three weeks. Despite the US Nonfarm Payrolls (NFP) increasing more than expected in June, downward revisions for May and April have prevented the USD from gaining strength.
Technical Indicators
Relative Strength Index (RSI): On the 4-hour chart, RSI has risen above 70, indicating that EUR/USD is technically overbought. However, this overbought condition does not necessarily signal an imminent drop, as long as key support levels hold.
Support Levels: The 1.0800 level, which coincides with the 100-day and 200-day Simple Moving Averages (SMA), is a crucial support. A drop below this level could see the next supports at 1.0760 and 1.0730-1.0740.
Resistance Levels: On the upside, the 1.0840 level (Fibonacci 23.6% retracement) serves as interim resistance, followed by the psychological level of 1.0900.
Economic Indicators and Market Sentiment
Nonfarm Payrolls: The US NFP report exceeded expectations with a rise to 206K, higher than the forecasted 190K, but revisions for previous months and a rise in the unemployment rate to 4.1% have tempered the positive impact.
Unemployment Rate: Increased to 4.1%, the highest since November 2021, slightly higher than the expected 4.0%.
Average Hourly Earnings: Growth slowed to 3.9% YoY, matching expectations but down from the previous 4.1%.
Market Expectations
Fed Policy: The CME FedWatch Tool indicates a 25% probability that the Federal Reserve will leave the policy rate unchanged in September. Weak job data could push the USD down further, as markets may price in a September rate cut. Conversely, stronger-than-expected NFP data could lead to reassessments regarding the timing of the Fed’s policy adjustments, potentially triggering a downward correction in EUR/USD.
Upcoming Economic Events
Fed Chairman Jerome Powell’s Appearance: Traders will look for insights on monetary policy direction.
EU and US Inflation Data: Final inflation figures will be released on Thursday, which could impact EUR/USD movements.
German Retail Sales and US PPI: Scheduled for next Friday, these data points will provide additional market cues.
EUR/USD has shown signs of losing traction but remains above the 1.0800 level after peaking above 1.0840, its highest in three weeks. Despite the US Nonfarm Payrolls (NFP) increasing more than expected in June, downward revisions for May and April have prevented the USD from gaining strength.
Technical Indicators
Relative Strength Index (RSI): On the 4-hour chart, RSI has risen above 70, indicating that EUR/USD is technically overbought. However, this overbought condition does not necessarily signal an imminent drop, as long as key support levels hold.
Support Levels: The 1.0800 level, which coincides with the 100-day and 200-day Simple Moving Averages (SMA), is a crucial support. A drop below this level could see the next supports at 1.0760 and 1.0730-1.0740.
Resistance Levels: On the upside, the 1.0840 level (Fibonacci 23.6% retracement) serves as interim resistance, followed by the psychological level of 1.0900.
Economic Indicators and Market Sentiment
Nonfarm Payrolls: The US NFP report exceeded expectations with a rise to 206K, higher than the forecasted 190K, but revisions for previous months and a rise in the unemployment rate to 4.1% have tempered the positive impact.
Unemployment Rate: Increased to 4.1%, the highest since November 2021, slightly higher than the expected 4.0%.
Average Hourly Earnings: Growth slowed to 3.9% YoY, matching expectations but down from the previous 4.1%.
Market Expectations
Fed Policy: The CME FedWatch Tool indicates a 25% probability that the Federal Reserve will leave the policy rate unchanged in September. Weak job data could push the USD down further, as markets may price in a September rate cut. Conversely, stronger-than-expected NFP data could lead to reassessments regarding the timing of the Fed’s policy adjustments, potentially triggering a downward correction in EUR/USD.
Upcoming Economic Events
Fed Chairman Jerome Powell’s Appearance: Traders will look for insights on monetary policy direction.
EU and US Inflation Data: Final inflation figures will be released on Thursday, which could impact EUR/USD movements.
German Retail Sales and US PPI: Scheduled for next Friday, these data points will provide additional market cues.
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