Daily Market Recap – EURUSD Euro remains under pressure after NFP report

The U.S. economy created more jobs than expected in June but the job market is far from having fully recovered from the pandemic, the Labour Department announced Friday, reporting a slightly higher unemployment rate.

In total, 850,000 jobs were created against 680,000 expected by a consensus of analysts. The average hourly wage increased by 0.3% in June, against 0.4% expected, and its annual growth rate reached 3.6% after 1.9% the previous month.

Investors welcomed this good figure while noting that the labor market situation still bore the scars of the pandemic. A healthy labor market means that the U.S. central bank has less need to support the economy, which could push the institution to raise its tone in order to advance the normalization of its monetary policy. This would potentially lead to earlier than expected rate hikes by the Fed.

The comments made by the Labour Department weighed on the greenback as investors reassessed their expectations on the timing of a change in monetary policy. The dollar index, which compares the greenback to a basket of other major currencies, was down 0.38 percent after hitting a new three-month high earlier in the session at 92.74 points.

From a technical perspective, the EURUSD initially continued its downward slide after prices broke through support at $1.1875. However, the pair recovered some of its daily losses after the release of the NFP data. Looking at the charts, the pair was evolving in a bullish channel, so the breakout from below may open the door for a deeper correction in the coming days.

For the time being, the momentum remains bearish in the short term and sellers could push in to seek the next key level at $1.1710. As long as the EUR/USD fails to regain height to regain the $1.1875 level, sellers will keep the upper hand.

(Chart Source: Tradingview 04.07.2021)

As a result, we believe that the bearish wave is not over. The euro is not showing any signs of recovery, so we will have to wait for a market reaction towards the next support to hope for a technical rebound.

Support & Resistance Levels:

R3 1.21455

R2 1.20523

R1 1.19214

S1 1.18000

S2 1.17833

S3 1.17000

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.