EURUSD: overboughtFriday was a non-working day in the US, as the country was celebrating Independence Day. The most important weekly macro data was related to US jobs data. At the start of the week JOLTs job openings in May were posted with a figure of 7.769M, significantly higher from market estimate of 7,3M. The next day the NFPs and Unemployment rate was published. As per data, the unemployment rate dropped by 0,1pp to the level of 4,1%, which missed market expectations of 4,2%. The Non-farm payrolls in June added 147K new jobs, again better from forecasted 110K. The average hourly earnings were higher by 0,2% in June, or 3,7% on a yearly basis, modestly below the forecasted 3,9%. Other weekly macro data including ISM Manufacturing PMI in June reached 49,0 a bit higher from estimated 48,8. The ISM Services PMI in June was standing at 50,8 in line with market estimates.
Retail Sales in Germany dropped by an additional -1,6% in May, bringing the indicator to the level of +1,6% on a yearly basis. Both figures were lower from the market estimate of +0,5% for May and +3,3% for the year. Inflation rate in Germany preliminary in June was 2% a bit lower from forecasted 2,2%. Inflation for the month was standing at 0%. Preliminary inflation data for the Euro Zone in June was 0,3% for the month and 2% for the year. EuroZone core inflation was standing at 2,3% in June, exactly in line with market estimates. The unemployment rate in the Euro Zone in May was modestly increased by 0,1pp to the level of 6,3%, while the market was expecting to remain flat at 6,2%.
The US Dollar continued its decline against the euro during the previous week. The highest weekly level was at 1,1825, but the currency pair closed the week at 1,1776. The RSI reached the level of 73, signalling a clear overbought market side, increasing the probability of a short term reversal in the coming period. The MA50 continues to diverge from MA200, indicating low probability of a potential cross in the future period.
The eurusd daily chart is showing that the currency pair had formed a sort of channel with an uptrend during the past period. If lows from end of February, mid March and end of March are connected, the indication for a next potential level of eurusd might be somewhere above the 1,16 level. The 1,1620 was the highest level achieved in mid July this year, which aligns well with the previous indication. Indicators are currently showing higher probability of a short term reversal. The week ahead is not bringing any currently significant news with respect to the US economy, in which sense, it could be expected that the market will slow down a bit during the week. Short reversal is quite possible, where the level of 1,1620 might be shortly tested. Just in case that the market decides to continue movement toward the higher grounds, then 1,18 resistance will be tested, before the market continues its road toward the 1,19 level.
Important news to watch during the week ahead are:
EUR: Industrial Production in May in Germany, Retail Sales in the Euro Zone for May, Balance of Trade in Germany in May, Inflation rate final for May in Germany,
USD: FOMC Meeting minutes.
