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EURUSD: low volatility expected as US market is offline

Major currencies ended the week lower. The largest drop against the US dollar was seen in the Australian dollar (-0.81%). A smaller drop was recorded by the euro (-0.60%), the New Zealand dollar (-0.56%), the Swiss franc (-0.41%), the British pound (-0.33%), the Canadian dollar (-0.22%), and the Japanese yen (-0.21%).

The single currency closed the week 0.13% higher at 1.1864 on Friday, July 2. The market reacted to the stronger than expected NFPs report by buying into the dollar. The euro retraced to a low of 1.1807, from which it bounced sharply to 1.1874. Investors were not satisfied with the other details of the report as average hourly wages fell and the unemployment rate rose. Additional pressure on the dollar was exacerbated by the long weekend stateside (Independence Day).

Today’s macro agenda (GMT+3)

  • From 10:55 to 11:00 Markit Services PMIs are due out in France, Germany and the Eurozone
  • 11:30 Eurozone Sentix investor confidence (July); UK: CIPS services sector PMI (June), mortgage loans (Q1)
  • 17:30 Canada: BoC business survey outlook (Q2).

Current outlook

The euro declined 0.60% over the past week, and 3.01% over the month. The common currency climbed 1.08% in Q2, and 2.94% during H121. Buyers saw most of their gains erased after the June 16 FOMC meeting.

Key support runs through 1.1790 (the daily trendline), with a low of 1.1807. Technical conditions look favorable for the resumption of growth. If the price action rises to 1.1970 by July 9, the first signal to continue the recovery to 1.2100 will emerge. Otherwise, the euro risks sliding to 1.1660.

The dollar opened today’s APAC trading on the front foot. The market is correcting after Friday's pullback. The euro fell to 1.1851 (55-day SMA). At the time of writing, EURUSD was trading at 1.1865. Given that US exchanges are closed for the long Independence Day weekend, volumes are expected to be thin on Monday, with the price action rangebound at 1.1841-1.1885.


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