- The EUR is not out of the woods yet, despite 200-pip recovery from the weekly low of 1.1510.
- The monthly chart shows the EUR closed below the key 38.2 percent Fibonacci retracement level.
- Strong US wage growth number could derail the corrective rally.
The EUR/USD pair jumped above 1.17 on Tuesday as Italy's anti-establishment parties revived coalition plans, ending three months of political deadlock.
Further, the Eurozone inflation rate rose at a rate of 1.9 percent in May, beating the estimate of 1.6 percent and rising well above the previous month's print of 1.2 percent.
Despite the good news, the EUR/USD's monthly close was below 1.1710 (38.2 percent Fibonacci retracement of 1.0341-1.2556), boosting the odds of a deeper sell-off. The 5-month moving average (MA) and the 10-month MA has rolled over in favor of the bears.
Meanwhile, the US President Trump has launched a trade war on the EU, by slapping tariffs on Steel and Aluminum imports. Further, Spanish Prime Minister Rajoy could face defeat in the no-confidence vote to be held today.
So, the common currency is not out of the woods yet, despite the 200-pip rally from the weekly low of 1.1510.
A better-than-expected US non-farm payrolls and wage growth data would bolster the already bearish technical setup seen in the monthly chart and could derail the corrective rally. On the other hand, the probability of a Fed rate hike in June will likely drop below 70 percent, sending the US dollar lower across the board if the wage growth figure misses estimates by a wide margin.
EUR/USD Technical Levels
As of writing, the pair is trading at 1.1682. The resistance is seen at 1.1710 (38.2% Fib R of 1.0341-1.2556), 1.1723 (23.6% Fib R of 1.2414-1.1510), and 1.1769 (4H 200MA). Meanwhile, support is lined up at 1.1658 (50-hour MA), 1.1633 (100-hour MA), and 1.16 (psychological level).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds above 1.0650 after US data
EUR/USD retreats from session highs but manages to hold above 1.0650 in the early American session. Upbeat macroeconomic data releases from the US helps the US Dollar find a foothold and limits the pair's upside.
GBP/USD retreats toward 1.2450 on modest USD rebound
GBP/USD edges lower in the second half of the day and trades at around 1.2450. Better-than-expected Jobless Claims and Philadelphia Fed Manufacturing Index data from the US provides a support to the USD and forces the pair to stay on the back foot.
Gold is closely monitoring geopolitics
Gold trades in positive territory above $2,380 on Thursday. Although the benchmark 10-year US Treasury bond yield holds steady following upbeat US data, XAU/USD continues to stretch higher on growing fears over a deepening conflict in the Middle East.
Ripple faces significant correction as former SEC litigator says lawsuit could make it to Supreme Court
Ripple (XRP) price hovers below the key $0.50 level on Thursday after failing at another attempt to break and close above the resistance for the fourth day in a row.
Have we seen the extent of the Fed rate repricing?
Markets have been mostly consolidating recent moves into Thursday. We’ve seen some profit taking on Dollar longs and renewed demand for US equities into the dip. Whether or not this holds up is a completely different story.