EUR/USD analysis: Post-NFP upsurge helps breakthrough five-month-old descending channel
|- Encouraging trade developments helped ease the post-NFP USD bearish pressure.
- Dips might now be seen as a buying opportunity amid a bullish technical set-up.
Broad-based US Dollar weakness remained a key theme on Friday and the bearish pressure aggravated further following the disappointing release of the latest US monthly jobs report. The headline NFP print showed that the US economy added only 75K new jobs in May, well below consensus estimates and worse than the previous month's downwardly revised reading of 224K. Adding to the disappointment, weaker than expected wage growth data suggested that inflationary pressure could remain subdued and increased the odds for an eventual Fed rate cut move in the coming months.
Persistent USD selling bias helped the EUR/USD pair to build on the post-ECB positive move and surged to an intraday high level of 1.1348 - the highest level since March 22. The pair also recorded its strongest weekly close since late-February and confirmed a near-term bullish break through a five-month-old descending trend-channel, though encouraging trade-related development kept a lid on any subsequent up-move. The US President Donald Trump suspended plans to impose tariffs on Mexico after the two countries reached an agreement on immigration.
The pair retreated back to the 1.1300 handle during the Asian session on Monday but the downside seemed cushioned amid fears of a longer US-China trade war. With several European markets closed on account of Whit Monday holiday, the pair remains at the mercy of the USD price dynamics amid relevant market moving economic releases.
Meanwhile, the technical picture now seems to have turned in favour of bullish traders and hence, any subsequent slide might still be seen as a buying opportunity near 100-day SMA, around the 1.1275 region. Having said that, a sustained break through the mentioned support might turn the pair turn vulnerable to accelerate the slide further towards the 1.12220 intermediate support en-route the 1.1200 handle.
On the flip side, momentum back above the 1.1335 area might assist the pair to aim towards challenging the very important 200-day SMA, around the 1.1365-70 region. A follow-through buying has the potential to lift the pair beyond the 1.1400 handle towards testing March swing highs, around mid-1.1400s.
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