- EUR/USD struggles to lure buyers and is undermined by a combination of factors.
- Reduced Fed rate cut bets continue to lend support to the USD and cap the upside.
- Political uncertainty in Europe is further holding back the Euro bulls on the defensive.
The EUR/USD pair edges higher during the Asian session on Tuesday and currently trades around the 1.0765-1.0770 area, albeit lacks strong follow-through buying. Moreover, the fundamental backdrop and the technical setup warrant some caution before positioning for an extension of the previous day's modest rebound from the 1.0735-1.0730 region, or a one-month low.
The US Dollar (USD) remains well supported by growing acceptance that the Federal Reserve (Fed) might keep interest rates higher for longer, bolstered by the stronger-than-expected US jobs data released on Friday. Adding to this, French President Emmanuel Macron's decision to call snap elections later this month increased political uncertainty in the Eurozone's second-biggest economy, which might continue to undermine the shared currency. This, in turn, favors bearish traders and validates the near-term negative outlook for the EUR/USD pair.
From a technical perspective, the post-NFP fall below the 100-day Simple Moving Average (SMA) near the 1.0800 mark and a subsequent breakdown through the 200-day SMA adds credence to the negative outlook amid bearish oscillators on the daily chart. Hence, any further move up might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly near the 1.0800 round figure. The said handle should act as a pivotal point, which if cleared decisively might prompt a short-covering rally towards the 1.0865-1.0870 supply zone en route to the 1.0900 mark.
On the flip side, the overnight swing low, around the 1.0735-1.0730 area now seems to protect the immediate downside ahead of the 1.0700 round figure. Some follow-through selling will be seen as a fresh trigger for bearish traders and drag the EUR/USD pair to the next relevant support near the 1.0650-1.0640 region. Spot prices could eventually slide towards testing the 1.0600 mark, or the YTD low touched in April.
EUR/USD daily chart
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 consolidates gains near 1.0750 after German inflation data
EUR/USD stays in positive territory at around 1.0750 in the second half of the day on Monday. The data from Germany showed that the annual CPI inflation declined to 2.2% in June, limiting the Euro's gains. Investors await US Manufacturing PMI data.
GBP/USD holds above 1.2650 ahead of US data
Following a bullish opening to the week, GBP/USD struggles to preserve its bullish momentum and trades in a tight range above 1.2650. The ISM Manufacturing PMI data for June will be featured in the US economic calendar on Monday.
Gold stabilizes above $2,330 as markets await US data
Gold clings to modest daily gains and fluctuates above $2,330 on the first trading day of the week. The benchmark 10-year US Treasury bond yield stays near 4.4% following last week's rally, limiting XAU/USD's upside ahead of US data.
Bitcoin is breaking above the falling wedge
Bitcoin breaking above the falling wedge pattern on Monday signals a bullish move, with Ethereum and Ripple poised to follow as they find support at key levels, paving the way for an upside rally in the days ahead.
Significant month for US stock markets and currencies
This month sees important time cycles across a range of instruments suggesting that we are at a major pivot point. In this video we look at the significant turning point coming out very shortly on the S&P 500 that will also impact the other US indices.