EUR/USD Current Price: 1.0702
- ECB President Christine Lagarde reaffirmed her hawkish stance.
- US employment-related figures signal a strong labour market.
- EUR/USD struggles to advance beyond 1.0700 while still below the critical 1.0745 level.
The US Dollar lost its strength, resulting in EUR/USD recovering the 1.0700 threshold. The Greenback turned south after the United States (US) House of Representatives passed the bill to suspend the debt limit. As a result, the market sentiment improved, with most Asian and European indices trading in the green.
European Central Bank (ECB) President Christine Lagarde offered a conference at the German Savings Banks and delivered some hawkish comments related to monetary policy. Lagarde noted that inflation is too high and is set to remain so for too long, saying there is no clear evidence underlying inflation has peaked. She then added that policymakers still have ground to cover on rates. Her hawkish words were no surprise but helped EUR/USD to preserve its strength.
Meanwhile, the Eurozone released the preliminary estimate of the May Harmonized Index of Consumer Prices (HICP), which rose by 6.1% YoY, decreasing from 7% in the previous month. The core annualized reading printed at 5.3%, while in the month, inflation remained pat.
Across the pond, the focus is on employment. The US published Challenger Job Cuts, showing that US-based employers announced 80,089 cuts in May, a 20% increase from the 66,995 cuts announced in the previous month. Also, the ADP survey showed the private sector added 278K new job positions, much higher than the 170K expected, adding signs of a still strong labour market. Finally, Initial Jobless Claims rose by 232K in the week ended May 26, while Q1 Nonfarm Productivity improved to -2.1%. On a positive note, Unit Labor Costs in the three-month to March were up by 4.2%, slowing from the previous 6.3%.
US employment-related figures spurred temporal US Dollar demand, although the American currency remains on the losing side.
EUR/USD short-term technical outlook
The EUR/USD pair trades around the 1.0700 level, not far below an early high of 1.0714. The chances of a steeper recovery are limited, according to the daily chart. The pair keeps trading well below its 20 and 100 Simple Moving Averages (SMAs), with the shorter aiming to cross below the longer one in the 1.0810/20 price zone. At the same time, technical indicators remain within negative levels, with the Relative Strength Index (RSI) indicator consolidating near oversold readings and the Momentum gaining ground but below its 100 level.
The bullish potential also seems limited in the near term. The 4-hour chart shows that EUR/USD battles to advance above a bearish 20 SMA as the longer moving averages maintain their bearish slopes far above the current level. At the same time, technical indicators have resumed their advances but stand within neutral levels. Bulls still need to regain the 1.0745 level to retake control of the pair.
Support levels: 1.0660 1.0620 1.0575
Resistance levels: 1.0745 1.0790 1.0825
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