- The EUR/USD pair has weakened following the June non-farm payroll report, which underscored the strength of the US labor market and has somewhat alleviated the Federal Reserve’s urgency to lower rates in July.
- US yields are expected to support the dollar ahead of Friday’s Independence Day, potentially impacting liquidity and market volatility.
- EUR/USD encounters short-term resistance at a key psychological level of 1.1800.
The Euro (EUR) declined against the US Dollar (USD) during Thursday’s trading sessions in the US.
After reaching a notable high of 1.1830 on Tuesday, it struggled with resistance as EUR/USD trades fell below 1.1800 at the time of writing.
On Thursday, market attention was largely directed toward the employment figures from the US. Investors were particularly interested in the June Non-Farm Payroll (NFP) report, searching for insights regarding when the Federal Reserve might consider interest rate cuts.
The NFP headlines illustrated that 147,000 jobs were added to the US economy in June, a figure that surpassed analysts’ expectations of 110,000, and improved on the 144,000 jobs created in May. The unemployment rate dipped from 4.2% to 4.1%, while wage growth remained stable.
Other data points, like unemployment figures, labor participation, and wage growth metrics, are crucial for the Federal Reserve as they assess inflation trends and are also highlighted in the report.
The robust labor market is encouraging the Fed to cut interest rates, which is providing slight support for the dollar as US yields are recovering.
EUR/USD encounters short-term resistance at 1.1800
The EUR/USD pair has shown considerable bullish momentum, recently hitting a high of 1.1830. This peak has led to some profit-taking, causing the pair to return to the psychologically significant resistance level of 1.1800.
Despite this pullback, prices remain above both the 10-day and 20-day Simple Moving Averages (SMA), which currently provide support around 1.1695 and 1.1592, respectively. Both averages are trending upwards, indicating ongoing strength in the short and medium term and supporting a broader bullish outlook.
EUR/USD Daily Chart
At present, the relative strength index (RSI) sits near 68, just shy of the overbought zone, indicating strong momentum. However, it also hints at the potential for short-term consolidation or a pullback.
If the pair can regain upward momentum beyond the 1.1695 support level, a retest and possible breakout above 1.1830 could be on the horizon.
