2023-06-05 07:03:19
EUR/USD has resumed its downtrend following the strong NFP and might approach yearly lows pending the Fed.
Dollar Resumes Uptrend on Strong NFP
The price of EUR/USD resumed its bearish trend on Friday following an employment report which showed a higher than expected number of job creations last month in the United States. While the consensus was counting on 180,000 job creations, the American economy finally created nearly 340,000, thus diminishing the prospects of a hard landing. The May employment report was not perfect, however, as the number of hours worked on average fell and the unemployment rate rose (mainly due to a sharp drop in the number of self-employed workers). entrepreneurs).
This divergence in the numbers was enough to bolster the outlook for a dovish Fed at its next meeting next week, but the likelihood of a rate hike at the next meeting (late July) has increased.
While waiting for this next Fed meeting next Wednesday and the first figures on CPI inflation for May next Tuesday, few important publications are expected. The only numbers to watch this week will be the US Services ISM on Monday and China’s CPI and PPI inflation numbers on Friday. Better-than-expected Chinese inflation figures would reassure traders regarding the country’s economic recovery, which should support major currencies and put pressure on the dollar and vice versa.
EUR/USD daily price chart – key levels
Technical analysis of the price of EUR/USD
EUR/USD might continue its decline in the short term
From a technical analysis perspective, the EUR/USD pattern has turned bearish since early May following the bearish reversal from $1.10. The technical setup remains bearish despite Thursday’s attempted rally (following some dovish/cautious comments from some Fed members).
EUR/USD is now back testing its 200-session moving average for the first time since breaking it last November. Selling pressure may therefore ease in the near term, but the outlook remains technically bearish below the 20-day moving average and last week’s high at $1.0780. The next major support to watch will be the year lows at around $1.05.
| Entrée | Shorts below $1.07 |
| Stop | 1,08$ |
| Objective | 1,055$ |
| Risk/reward ratio | >1 |
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