FundamentalOverview

The USD yesterday weakenedacross the board following soft USJobless Claims and ISMServices PMI reports. Overall, the data didn’t change much in terms ofinterest rates expectations, but it reinforced the view that the Fed is goingto deliver at least two rate cuts by the end of the year.

The EUR, on the other hand,has been under pressure mainly due to the US Dollar strength last week which hasbeen influenced more by quarter-end flows rather than something fundamental.This week, the US Dollar is back on the defensive as the market continues to tradethe soft-landing narrative.

Moreover, the Euro hasfound some support from the latest developments on the French elections front asPoliticoreported that hundreds of candidates from Macron’s camp and the left-wingalliance withdrew in an effort to keep the National Rally out ahead of thesecond round of voting this weekend.

EURUSD TechnicalAnalysis – Daily Timeframe

On the daily chart, we cansee that EURUSD broke out of the consolidation beneath the key 1.0727 level, andafter a brief retest, extended the rally into the 1.08 region helped by theweak US data.

The buyers will now want tosee the price breaking above the 1.0812 level to increase the bullish bets intothe 1.09 handle next. The sellers, on the other hand, will likely step inaround this level to position for a break below the 1.0727 supportwith a better risk to reward setup.

EURUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we cansee more clearly the breakout of the recent descendingtriangle-like consolidation, the retest of the 1.0727 level where we hadalso the minor upward trendlinefor confluence,and then the rally into the 1.0812 resistance.

If we get a pullback from theselevels, we can expect the buyers to lean on the trendline again to position fora break above the 1.0812 resistance with a better risk to reward setup. The sellers,on the other hand, will want to see the price breaking below the trendline andthe 1.0727 support to increase the bearish bets into the 1.06 handle next.

EURUSD TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, we cansee that we have an interesting support zone around the 1.0775 level where we canfind the confluence of the previous swing high, the 50% Fibonacciretracement level and another minor trendline.

This is where we can expectmore aggressive buyers to step in to position for a break above the 1.0812 resistancewith a better risk to reward setup. The sellers, on the other hand, will want tosee the price breaking lower to increase the bearish bets and provide thepullback into the next minor trendline around the 1.0750 level. The red linesdefine the average daily range for today.

UpcomingCatalysts

Tomorrow we conclude the week with the US NFP report where the data is expectedto show 180K jobs added in June and the Unemployment Rate to remain unchangedat 4.0%.