The EUR/USD has been bullish during the second half of June. However, the pair started the month failing to push through 1.37, stalling ahead of Thursday’s key event risks from both side of the pond.
1) European Central Bank Monetary Policy Announcement and Press Conference:
The ECB held its interest rates with the minimum bid rate at 0.15%. It maintained the deposit facility rate at -0.10%, which was made negative during the previous meeting to discourage saving and encourage lending and investments.
2) The Non-Farm Payroll was surprisingly strong, coming in at 288K for June. This blasted the forecast of 214K. May’s reading was revised up to 224K from 217K. The unemployment rate came in at 6.1%, surprising forecasts that called for it to remain at the 6.3% shown in May.
We can’t say its a complete surprise because the ADP jobs data earlier this week also dramatically beat forecasts just like the NFP. Still, the confirmation of better jobs data in June puts some light through the overcast on the USD put there by the Q1 GDP revision to -2.9% on the year.
The NFP is having more impact on the USD than the ECB is having on the Euro. In other words, the dip in EUR/USD below its June trendline is a USD-push, and not a EUR-pull. If traders push price below 1.36, it would signal a a bearish attempt to test the 1.35-1.350 June lows. The 1.3476 low on the year would also be in sight.
The 1.3640 level is in a support/resistance pivot area. If price pulls back up, monitor this level for resistance. Ability to hold below 1.3640 should maintain the bearish outlook. A rally above 1.3665 however, would reflect a false break to the downside, and in turn act as a strong bullish signal.
The daily chart maintains a bearish technical outlook. After June’s consolidation, price remains below the 200-, 100-, and 50-day SMA. The RSI tagged 30, and then held below 60 and is now dipping again. This reflects a persistent bearish momentum developing in the daily chart.
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