EURUSD has experienced a choppy start to the week so far. Initially trading from opening levels around 1.1345 up to a 6-week high of 1.1455 early Tuesday morning, before running into profit taking and then bouncing between these two levels in response to various drivers, including updates on US/China trade discussions, Eurozone inflation, US economy ,and constantly changing interest rate differentials.
Looking forward, there may be potential for this type of price action to continue over the next two trading days, as traders first digest the ECB interest rate decision, which is released at 1315 BST later today, then the comments of ECB President Lagarde in the press conference that commences at 1345 BST.
A 25bps (0.25%) interest rate cut from the ECB is fully anticipated, so is unlikely to cause much of a stir. However, comments from Madame Lagarde in the press conference could lead to volatile EURUSD price action, depending on if she outlines whether policymakers remain open to further cuts, as Eurozone inflation (May CPI 1.9% YoY) moves below the central bank’s 2% target, or if now is the time for a pause to assess the potential impact of US tariffs and future European defence/infrastructure spending.
On Friday, the dollar side of the EURUSD currency pair, could be impacted significantly by the outcome of the latest update on the US labour market in the form of the US Non-farm Payrolls release at 1330 BST.
Data out earlier in the week has so far offered a mixed assessment of the US labour market during the on-going trade tariff uncertainty. However this payrolls update is the one that usually grabs the attention of traders and investors and probably holds more significance.
Their focus is likely to be on the direction of the unemployment rate (currently 4.2%) and average hourly earnings, where any large deviation from market expectations may see EURUSD volatility increase into the weekend, especially if it indicates a weakness in the US economy.
Technical Update:
Today’s ECB announcement, followed by payrolls on Friday, has the potential to be the next important EURUSD sentiment driver, with the reaction to these events possibly offering clues to the next path for price activity.
It has already been an impressive recovery in EURUSD since the May 12th session low at 1.1065, a move that has now seen closing breaks above resistance at 1.1425, which is equal to the April 28th last recovery failure high.
However, as we approach the ECB decision and payrolls release, what are the potential support and resistance levels traders may be watching?
Potential Resistance Levels:
Price strength so far this week has been capped by sellers at 1.1455 on June 3rd. As such, this level represents a first possible resistance focus, as having found sellers at this point previously, they may be found again.
While breaks above the 1.1455 high will not guarantee continued price strength, it could open potential for an upside push in price towards the April 21st high 1.1573, possibly further, if this were to give way on a closing basis.
Potential Support Levels:
After a period of price strength, such as that seen since the May 12th low, it is potentially the 38% Fibonacci retracement of the upside move, which in EURUSD stands at 1.1306, that may be viewed as a first support.
As such, if breaks below 1.1306 are seen over coming sessions, it may lead to a deeper decline in price towards 1.1214, which is the 61.8% Fibonacci retracement, possibly further.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
Looking forward, there may be potential for this type of price action to continue over the next two trading days, as traders first digest the ECB interest rate decision, which is released at 1315 BST later today, then the comments of ECB President Lagarde in the press conference that commences at 1345 BST.
A 25bps (0.25%) interest rate cut from the ECB is fully anticipated, so is unlikely to cause much of a stir. However, comments from Madame Lagarde in the press conference could lead to volatile EURUSD price action, depending on if she outlines whether policymakers remain open to further cuts, as Eurozone inflation (May CPI 1.9% YoY) moves below the central bank’s 2% target, or if now is the time for a pause to assess the potential impact of US tariffs and future European defence/infrastructure spending.
On Friday, the dollar side of the EURUSD currency pair, could be impacted significantly by the outcome of the latest update on the US labour market in the form of the US Non-farm Payrolls release at 1330 BST.
Data out earlier in the week has so far offered a mixed assessment of the US labour market during the on-going trade tariff uncertainty. However this payrolls update is the one that usually grabs the attention of traders and investors and probably holds more significance.
Their focus is likely to be on the direction of the unemployment rate (currently 4.2%) and average hourly earnings, where any large deviation from market expectations may see EURUSD volatility increase into the weekend, especially if it indicates a weakness in the US economy.
Technical Update:
Today’s ECB announcement, followed by payrolls on Friday, has the potential to be the next important EURUSD sentiment driver, with the reaction to these events possibly offering clues to the next path for price activity.
It has already been an impressive recovery in EURUSD since the May 12th session low at 1.1065, a move that has now seen closing breaks above resistance at 1.1425, which is equal to the April 28th last recovery failure high.
However, as we approach the ECB decision and payrolls release, what are the potential support and resistance levels traders may be watching?
Potential Resistance Levels:
Price strength so far this week has been capped by sellers at 1.1455 on June 3rd. As such, this level represents a first possible resistance focus, as having found sellers at this point previously, they may be found again.
While breaks above the 1.1455 high will not guarantee continued price strength, it could open potential for an upside push in price towards the April 21st high 1.1573, possibly further, if this were to give way on a closing basis.
Potential Support Levels:
After a period of price strength, such as that seen since the May 12th low, it is potentially the 38% Fibonacci retracement of the upside move, which in EURUSD stands at 1.1306, that may be viewed as a first support.
As such, if breaks below 1.1306 are seen over coming sessions, it may lead to a deeper decline in price towards 1.1214, which is the 61.8% Fibonacci retracement, possibly further.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.