- As the US labor market displays resilience, EUR/USD is at 1.1379, contributing to a rebound in the DXY after recent declines.
- Trump plans to discuss tariffs on steel and aluminum with Xi.
- Lower inflation in the Eurozone is likely to heighten expectations for interest rate cuts by the ECB in upcoming meetings.
The EUR/USD pair has retreated after reaching a six-week high of 1.1454 on Tuesday, largely due to concerns regarding the ongoing US trade policies. The strengthening US dollar has contributed to this decline, with the pair dropping 0.52% to 1.1379.
Wall Street remains optimistic following reports that President Trump is expected to engage with Chinese President Xi Jinping this week, according to sources from Reuters.
US economic data has supported the dollar. The US Dollar Index (DXY) has been buoyed by the Jobs and Labor Turnover Survey (JOLTS) for April, which exceeded expectations and indicated a strong labor market. However, factory orders sharply declined in April, reflecting pressure on manufacturing from Trump’s tariffs.
Uncertainty surrounding trade policies in the US is also affecting the EUR/USD pair. White House Press Secretary Karoline Leavitt mentioned that trade offers could validate the authenticity of negotiations. She noted Trump signed an executive order to double tariffs on steel and aluminum, effective Wednesday.
Turning to Europe, the Harmonized Index of Consumer Prices (HICP) for May has undershot the ECB’s inflation target, reinforcing expectations that the ECB may cut rates at its meeting this week.
In the Eurozone, significant events include the ECB’s monetary policy decisions and a press conference with ECB President Christine Lagarde. In the US, employment data releases are scheduled, including ADP National Employment changes on Wednesday, followed by initial unemployment claims and non-farm payroll figures at the end of May.
EUR/USD Daily Market Movers: Euro Retreats under 1.1400 in US JOLTS Report
- The upward trend in EUR/USD is still visible, yet we anticipate variations over economic data from the Eurozone.
- JOLTS data revealed an unexpected increase in job openings in the US, reaching 7.39 million, contrary to forecasts for a decline.
- US factory orders dropped by 3.7% in April, following a 4.3% increase in March, with economists expecting a smaller drop.
- Federal Reserve officials commented on their current position regarding tariffs and inflation, highlighting uncertainty about the impact on economic activity.
- Eurozone HICP inflation fell to 1.9% in May, marking the first time it is below the ECB’s 2% target in eight months.
- Market players have incorporated expectations that the ECB will reduce deposit facility rates to 25 basis points at the forthcoming meeting.
Euro Technical Outlook: EUR/USD Drops Below 1.1400, Bears Eye 1.1300
Despite the ongoing pullback, the EUR/USD still shows an overall upward bias in daily charts. The relative strength index (RSI) remains bullish but appears to be losing momentum, possibly leading to deeper corrections.
If EUR/USD falls below the recent low of 1.1344, it may open the way for a challenge at the 1.1300 level. A drop below this point could target the 50-day simple moving average (SMA) around 1.1278 and subsequently 1.1218. If declines continue, a test of 1.1200 might be expected.
On the flip side, if the EUR/USD ascends past 1.1400, buyers could aim for a weekly high of 1.1454, followed by an annual peak of 1.1573 set on April 21.
