The EURUSD rallied from a 1.0350 support as Dollar bulls lost steam post negative Labour data. EURUSD extended gains by +0.03% although bulls remain capped under the 1.0650 resistance. The ECB members continue to rally behind the possibility of the policy change as markets begin to price in a 25bps as early as July. Investors look forward to the ECB’s Lane speech and President Nagel later in the New York Session.
The US negative housing data and labour statistics continue to underpin the USD strength in the near term. However, a hawkish Fed remains a major headwind to the EURUSD bulls as markets expect a 50bps in the next two policy meetings. The German 10-year bond yields are currently capped by 9.20% and a failure to break above that area may reinforce a bearish outlook on the EURUSD.
Major events to watch out for are the Fed meeting minutes next week Wednesday and US GDP data on Friday.
EURUSD rebounding from the 1.0350 support may see bulls aiming to reclaim the 1.0650 previous broken support turned resistance. The pair is extremely oversold as indicated by the Stochastic Oscillator reading below 20.00. This indicates the pair is due for a retracement and holding above the 1.0350 will be necessary to attract bullish participation in the near term.
Upside gains are capped by the 1.0650 area, coinciding with the Williams Alligator indicator. The Williams Alligator shows a bearish outlook on EURUSD as bulls are capped by a dynamic resistance at 1.0650 and a break above 1.1000 will be necessary to change the outlook to bullish.
The ActivTrader Sentiment tool shows that 57% of retail traders have a bullish bias toward the EURUSD. Investor’s mood was quite optimistic after ECB turned to a hawkish approach toward interest rate hikes. The German PPI beat expectations by far from 31.5% surveyed to 33.5% boosting the EURUSD rally to the upside.
More so, Thursday negative initial jobless claims and shrinking Manufacturing index continue to underpin dollar strength in the near term.
The EURUSD is currently trading at a critical resistance at 1.0600 and a break above that area may see bulls targeting the 1.08000 resistance. Price has crossed above the Bollinger Band (20) baseline (yellow) indicating a change in market direction in the near term.
The RSI indicator is at a 50.0 pivot level reading and a break above that area may renew bullish interest although upside gains remain challenged by the 1.08000 and 1.1100 psychological barriers. However, a failure to cross above that 50.00 pivots may see renewed selling pressure on the pair towards the 1.04000 psychological support.