EURUSD Technical Analysis – The greenback remains on the backfoot | Forexlive

Fundamental
Overview

The USD has been on the
backfoot since the beat in the US ISM Services PMI where the data showed that the last
month drop was just a blip and overall we have a resilient economy with lower
inflationary pressures.

The data continues to
reinforce the narrative that the next move is more likely to be a rate cut, and
that inflation is likely to keep coming back to target. This could keep
weighing on the greenback as the positive risk sentiment due to the pickup in
global growth is generally a headwind.

The EUR, on the other hand,
has been gaining ground against the USD mainly because of the Dollar weakness amid
the general risk-on sentiment regime. Yesterday, the Euro got a boost from the
ECB policy decision where the central bank delivered a “hawkish cut” as they
didn’t pre-commit to anything and revised the inflation forecasts higher.

They probably decided to
err on the cautious side due to the recent data from the Eurozone where we saw
a pickup in the PMIs, high wage growth and a strong labour market. Overall, the
EUR is likely to remain supported amid the positive risk sentiment.

EURUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that the price action in the EURUSD pair has been mostly rangebound between
the 1.08 support and the 1.09 resistance as the risk sentiment
has been mixed but with a bullish bias.

The buyers will keep on
piling in inside the range to position for a rally into the 1.10 handle. The
sellers, on the other hand, will likely keep on leaning on the resistance with
a defined risk above it to position for a drop back into the 1.08 support.

EURUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the rangebound price action with the multiple failed tries to extend
the rally above the resistance. The overall trend remains bullish, and the
positive risk sentiment should support the Euro. Today, we have the US NFP and
that could provide a dip-buying opportunity for the buyers.

In fact, in case we get a
hot report with strong wage growth, we might see a spike lower into the 1.08
support where the buyers will likely step in to position for a rally into the
1.10 handle with a better risk to reward setup. Conversely, if the report comes
out good without hot wage growth figures, then we could see the pair breaking
out to the upside and extending the rally into new highs.

EURUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a strong level around 1.0860 where the price reacted from
several times in the past days. This will be the first support for the buyers
in case the price dips to this zone.

The sellers, on the other
hand, will want to see the price breaking lower to increase the bearish bets into
the 1.08 support next. The red lines define the average daily range for today.
Note though that the price can easily extend above or below these levels when
we have strong market moving catalysts like today’s NFP report.

Upcoming
Catalysts

Today we conclude the week with the US NFP report where the consensus sees
185K jobs added in May and the unemployment rate remining unchanged at 3.9%.
Moreover, the average hourly earnings are seen at 3.9% for the Y/Y figure and
0.3% for the M/M measure.

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