EUR/USD faces a critical test before US jobs report
EUR/USD is hovering near key support ahead of Thursday's US jobs report, with dollar strength threatening to push the pair lower.
Founder, Mott Capital Management
EUR/USD tests 1.14 support
EUR/USD finds itself in a precarious position one day before the key June US jobs report on Thursday, 2 July. The pair is trading around 1.14, a key support area. A short-term resistance level has also emerged near the 10-day exponential moving average.
Support for the euro appears limited for now. The currency pair is trading below both its 50-day and 200-day moving averages, suggesting those levels may now act more as resistance than support.
EUR/USD, November 2024 - present
Sources: TradingView, Michael J Kramer
Jobs report could decide the next move
If the euro breaks below 1.1400 after a potentially strong US jobs report, it could weaken towards 1.1280. Over time, that could even open the way to a further decline towards the 1.1090 area.
It is worth noting that the euro may be forming a bullish divergence, with the RSI making a higher low as recently as 24 June while the exchange rate has made a lower low since mid-March. That could be an early sign that the euro is trying to form a bottom, although it does not necessarily mean the decline is over.
For now, broad-based dollar strength appears to be developing across markets, which could become a significant headwind for the euro going forward.
H2 outlook: US dollar may reassert itself amid hawkish shift
In part three of our four-part second-half outlook series, Michael Kramer looks at how renewed inflation pressure and hawkish central banks could support the US dollar.
