EUR/USD in a narrow range: Focus on Fed Minutes

EUR/USD is trading around 1.1432 on Monday. At the end of last week, the main currency pair posted modest gains. Weaker-than-expected US labour market data and lower oil prices have weighed on the US dollar, prompting investors to reconsider expectations for further Federal Reserve policy tightening.

The Nonfarm Payrolls report released last week showed that the US economy added only 57,000 new jobs in June, falling well short of the 110,000 forecast – the weakest result in four months. This outcome has reduced the likelihood of a Fed rate hike as early as September.

An additional factor weighing on the dollar was the decline in oil prices. The restoration of supplies through the Strait of Hormuz, along with expectations of increased OPEC+ production, has raised concerns about a potential global oversupply. This dynamic is helping to reduce inflation risks and the need for further rate increases.

The market's focus this week is on the release of the June Federal Reserve meeting minutes. Investors are hoping for additional signals on the future trajectory of US monetary policy and the outlook for interest rates.

Technical analysis

On the H4 chart of EUR/USD, the pair is trading within a consolidation range around 1.1422, currently extending between 1.1422 and 1.1470. An upside breakout from this range would suggest a corrective move towards 1.1480, followed by a decline to 1.1260. A downside breakout would open the way for a direct move to 1.1260. The MACD indicator supports this scenario, with its signal line above zero but pointing firmly downwards, reflecting continued bearish momentum.

On the H1 chart, EUR/USD has reached 1.1470 and is now forming a consolidation range below this level. A range expansion down to 1.1408 and up to 1.1480 is expected, followed by a decline to 1.1260. The Stochastic oscillator confirms this scenario, with its signal line at 50 and pointing downwards towards 20.

Conclusion

EUR/USD remains in a narrow range as markets await fresh catalysts, with focus turning to the release of the Fed minutes later this week. Last week's weaker-than-expected US jobs data and falling oil prices have eased pressure on the euro, reducing the likelihood of a September rate hike. The restoration of Hormuz shipments and potential OPEC+ supply increases have further dampened inflation concerns. However, the broader technical picture remains bearish, with indicators pointing towards a potential decline to 1.1260 in the medium term. The Fed minutes will be closely scrutinised for any shifts in the policy outlook that could determine the pair's next directional move.