The EURUSD advanced amid softer-than-expected US ISM Services PMI coupled with a possible slowdown in the US labor market, as indicated by the latest ADP report showing that private payroll growth edged lower in June. Traders are expected to closely monitor the currency market in light of the forthcoming release of significant economic data, including the week's main event, the Nonfarm Payrolls, that could potentially impact currency valuations.
Overview
The EURUSD advanced amid softer-than-expected US ISM Services PMI coupled with a possible slowdown in the US labor market, as indicated by the latest ADP report showing that private payroll growth edged lower in June. Traders are expected to closely monitor the currency market in light of the forthcoming release of significant economic data, including the week's main event, the Nonfarm Payrolls, that could potentially impact currency valuations.
Upcoming High Impact Economic Events
Friday 12:30 pm (GMT+0): Employment Change (CAD)
Friday 12:30 pm (GMT+0): Unemployment Rate (CAD)
Friday 12:30 pm (GMT+0): Average Hourly Earnings m/m (USD)
Friday 12:30 pm (GMT+0): Non-Farm Employment Change (USD)
Friday 12:30 pm (GMT+0): Unemployment Rate (USD)
Sunday All Day: French Parliamentary Elections (EUR)
Technical Analysis
In June, the EURUSD currency pair peaked in its exchange rate before undergoing a retracement attributed to a bearish reversal pattern known as a non-failure swing in technical analysis. Specifically, prices achieved a high of 1.09161, exceeding the previous peak, and subsequently retreated below the trough of 1.07882, indicating a potential correction. The bearish correction remained within a descending channel, reaching a low price of 1.06675. Following this, prices breached the upper channel line, indicating the prevalence of bullish momentum and the possibility of further upward movement. Both the 50-period Exponential Moving Average (EMA) and the Momentum oscillator validate the bullish perspective. Notably, prices hover above the EMA, and the Momentum oscillator exhibits values above the 100 baseline.
Potential Upside Targets
If the bulls manage to maintain control of the market, traders may consider the following three potential upside targets:
1.08416: The initial price objective is seen at 1.08416, calculated as the 23.6 percent Fibonacci Retracement drawn from the trough at 1.06010 up to the peak at 1.09161.
1.09161: The second price objective is 1.09161, aligning with the highest exchange rate reached in June.
1.10073: An additional resistance level is determined at 1.10073, representing the 423.6 percent Fibonacci Extension drawn from the swing high of 1.07465 down to the swing low of 1.06659.
Potential Downside Targets
If the bears manage to take control of the market, traders may find potential opportunities in the following three downside targets:
1.06675: The initial downside target is set at 1.06675, corresponding to the daily low marked on June 14.
1.07247: The second level of support is estimated at 1.07247, representing an internal trendline running from the peak marked on June 28 to the trough marked on May 9.
1.06010 The third line of support is calculated at 1.06010, corresponding to the trough formed on April 16.
Conclusion
In conclusion, the EURUSD’s recent advance is influenced by softer-than-expected US ISM Services PMI and signs of a potential slowdown in the US labor market. Traders are expected to closely monitor upcoming high-impact economic events, particularly the Nonfarm Payrolls, which could significantly affect currency valuations. Technically, the EURUSD has shown bullish momentum after a bearish correction, with potential upside targets at 1.08416, 1.09161, and 1.10073, respectively.