Euro stretch its gains after weak NFP data softens US Dollar

The Euro edged higher against the US dollar and could be set to close the week in gains after June’s NFP report disappointed. The report showed that the US economy just added 57,000 jobs, falling short against market expectation of 114,000. Average hourly earnings remained steady at 0.3%, while unemployment rate dropped by -0.1% to 4.2%. Reacting to the news, the US dollar index lost over 0.40% in value as analysts now expect the Fed’s not to raise rates in the near-term.

Across the markets, Gold prices have now maintained a 2 day streak in gains with the price now looking to explore higher levels above the $4000 price handle. Oil prices have continued to drift lower as Oil supply continues to increase after the opening of the Strait of Hormuz. The Brent hit $71 barrel and could head lower as energy experts claim that crude oil supply through the route could exceed 10million barrels per day.

The Fed Chair, Kevin Warsh on Wednesday reiterated that the central bank remains committed to seeing inflation ease to its 2% target while still maintaining his position on “No Forward Guidance” at future meetings, rather investors should focus on real-time economic data.

Technical outlook

The general outlook on the EURUSD remains bearish despite the market entering a corrective rally. After the price made a sweep of 1.1340 price level, the price continued to print higher highs and higher lows until it remained range bound between 1.1380 and 1.1434. Following the outcome of the NFP data which caused the price to exit from the range, the market now looks primed to move higher with supply zones ahead.

Bullish scenario

The short-term outlook favors buyers after the price broke out of the descending trendline and has made a retest and stretched towards 1.1470 which it had previously rejected from. For buyers to strengthen their case, the price needs to secure a daily close 1.1480 and hold this level as it’s new support if the price pulls back for a retest. If the momentum continues, the next upside targets will be supply zones at 1.1530 and 1.1600.

Bearish scenario

Despite the price making attempts to recover, the general trend still favors sellers as the price is still trading below major supply zones and the sequence of lower highs and lower lows is yet to be broken. For sellers aiming to align themselves with the trend, they should look for price rejections at the supply zones 1.1480 or 1.1530. Should the price respect these levels, then we could see the beginning of another leg lower which will expose 1.1380 and 1.1343 support.