- The US added 206,000 jobs in June, slightly more than the forecast of 191,000 jobs.
- Investors raised bets on a September Fed cut to 76%.
- Renewed political uncertainty in the eurozone initially weighed on the euro.
EUR/USD forecast supports bullish sentiment. The dollar was vulnerable after losing 1% last week on bad data. Meanwhile, the euro recovered after falling due to the unexpected outcome of the last round of French elections.
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The dollar fell last week as economic figures revealed a slowdown in the US economy. The primary catalyst was the nonfarm payrolls report, which showed weakness in the labor market. The report found that the US added 206,000 jobs in June, slightly more than the forecast of 191,000 jobs. Meanwhile, average hourly earnings decreased from 0.4% to 0.3%. The unemployment rate increased from 4.0% to 4.1%, indicating a deterioration in the sector.
Accordingly, investors raised bets on a Fed tapering in September to 76%. This continued economic downturn could prompt Fed policymakers to take a more dovish stance. Before that, however, they might have to wait to see this week’s inflation figures. The softer-than-expected data is likely to pave the way for lower borrowing costs in the US. However, if the numbers show continued price pressures, policymakers may maintain their cautious stance.
Meanwhile, renewed political uncertainty in the Eurozone initially weighed on the Euro. The left-wing alliance won the elections, but there was no majority victory. So this created a hung parliament, which made it difficult to pass any policy, especially if the different groups couldn’t work together.
The results were also surprising, as the polls indicated that the national assembly would win. However, the party came third.
EUR/USD key events today
It may be a slow day for the market as neither the US nor the Eurozone will release any major economic reports.
EUR/USD Technical Forecast: Bulls are approaching a strong barrier at 1.0850
On the technical side, the EUR/USD price is approaching the resistance level at 1.0850. The bulls have been in the lead since the price broke above the 1.0750 resistance level. As a result, the price remained above the 30-SMA with the RSI near the overbought region.
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However, the rally could soon stall if resistance at 1.0850 remains firm. A break could allow the price to retest the 30-SMA support before continuing higher or falling below. A break above the resistance at 1.0850 would indicate a strong bullish bias.
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