EUR/USD for July 05: FOMC Meeting Minutes Key for Direction
EUR/USD Daily Update for July 05. Here is what you need to know to trade the pair today.
FUNDAMENTALS:
A strong gain in jobs but rising unemployment rate and unchanged wages in the US led to some selling pressure in USD, but profit-taking ahead of the extended weekend and US holidays was likely the key driver of US weakness on Friday. Look for a short-term correction, but the direction for USD will likely continue to be bullish.
In the euroarea, wories about the new Delta virus variant and softer German PMIs could extend the downtrend in EURUSD. The FOMC Meeting Minutes on Wednesday will be a key event for the future direction of the pair, as markets will scrutinize how Fed hawks and doves are arguing their cases for a potential rate hike in 2022. For now, there is little reason for markets to lower their Fed hiking expectations.
Latest Headlines:
USD News:
US Dollar Index remains on the defensive near 92.20
US Dollar Index Price Analysis: DXY probes rising wedge breakdown above 92.00
US inflation expectations fade recovery moves
Fed and ECB events to keep an eye on this week
EUR News:
EUR/USD to resume its falls amid covid worries and a rethink about the Fed's moves
Eurozone Sentix Investor Confidence improves to 29.8 in July, misses estimates
Eurozone June final services PMI 58.3 vs 58.0 prelim
Germany Markit Services PMI came in at 57.5, below expectations (58.1) in June
Germany Markit PMI Composite below expectations (60.4) in June: Actual (60.1)
Upcoming Market Reports:
Here are the most important market reports for EUR/USD to follow in the coming days (all times are UTC timezone):
Monday at 12:00: USD Bank Holiday
Tuesday at 09:00: EUR ZEW Economic Sentiment (Expected: 79.0, Previous: 81.3)
Tuesday at 09:00: EUR German ZEW Economic Sentiment (Expected: 75.0, Previous: 79.8)
Tuesday at 14:00: USD ISM Services PMI (Expected: 63.9, Previous: 64.0)
INTERMARKET:
2-year yield differentials point at further downside potential in the EURUSD pair.
SENTIMENT:
CoT:
The net positioning in EUR among leveraged money remains bearish, although this category of traders reduced their bearish bets in the previous week. USD positioning (as measured by the value of total contracts) is less bearish after the Fed adopted their hawkish stance, although the majority of traders are still short on the currency. Watch out for a short-squeeze here. Positioning is bearish for EUR/USD.
TECHNICALS
The pair broke above a longer-term bearish trendline on the 1-hour chart, although on quite light volume. The overall trend remains bearish until we see a break above the 1.1974 level, which also acts as a key resistance to the upside.
Other levels to watch:
Major resistance: 1.1974
Minor resistance: 1.1900-10 (61.8% Fib)
Minor support: 1.1852
Major support: 1.1805 (last week's low)
== SUMMARY ==
From a fundamental standpoint, the pair has potential to move towards 1.17 during the week, but a short position can only be established if we get a clear signal that the bearish trend is resuming.
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FUNDAMENTALS:
A strong gain in jobs but rising unemployment rate and unchanged wages in the US led to some selling pressure in USD, but profit-taking ahead of the extended weekend and US holidays was likely the key driver of US weakness on Friday. Look for a short-term correction, but the direction for USD will likely continue to be bullish.
In the euroarea, wories about the new Delta virus variant and softer German PMIs could extend the downtrend in EURUSD. The FOMC Meeting Minutes on Wednesday will be a key event for the future direction of the pair, as markets will scrutinize how Fed hawks and doves are arguing their cases for a potential rate hike in 2022. For now, there is little reason for markets to lower their Fed hiking expectations.
Latest Headlines:
USD News:
US Dollar Index remains on the defensive near 92.20
US Dollar Index Price Analysis: DXY probes rising wedge breakdown above 92.00
US inflation expectations fade recovery moves
Fed and ECB events to keep an eye on this week
EUR News:
EUR/USD to resume its falls amid covid worries and a rethink about the Fed's moves
Eurozone Sentix Investor Confidence improves to 29.8 in July, misses estimates
Eurozone June final services PMI 58.3 vs 58.0 prelim
Germany Markit Services PMI came in at 57.5, below expectations (58.1) in June
Germany Markit PMI Composite below expectations (60.4) in June: Actual (60.1)
Upcoming Market Reports:
Here are the most important market reports for EUR/USD to follow in the coming days (all times are UTC timezone):
Monday at 12:00: USD Bank Holiday
Tuesday at 09:00: EUR ZEW Economic Sentiment (Expected: 79.0, Previous: 81.3)
Tuesday at 09:00: EUR German ZEW Economic Sentiment (Expected: 75.0, Previous: 79.8)
Tuesday at 14:00: USD ISM Services PMI (Expected: 63.9, Previous: 64.0)
INTERMARKET:
2-year yield differentials point at further downside potential in the EURUSD pair.
SENTIMENT:
CoT:
The net positioning in EUR among leveraged money remains bearish, although this category of traders reduced their bearish bets in the previous week. USD positioning (as measured by the value of total contracts) is less bearish after the Fed adopted their hawkish stance, although the majority of traders are still short on the currency. Watch out for a short-squeeze here. Positioning is bearish for EUR/USD.
TECHNICALS
The pair broke above a longer-term bearish trendline on the 1-hour chart, although on quite light volume. The overall trend remains bearish until we see a break above the 1.1974 level, which also acts as a key resistance to the upside.
Other levels to watch:
Major resistance: 1.1974
Minor resistance: 1.1900-10 (61.8% Fib)
Minor support: 1.1852
Major support: 1.1805 (last week's low)
== SUMMARY ==
From a fundamental standpoint, the pair has potential to move towards 1.17 during the week, but a short position can only be established if we get a clear signal that the bearish trend is resuming.
Please hit the 'LIKE' button if you find this post useful. Also, don't forget to follow to get more trade ideas like this. Thanks!
