EURUSD: path to overbought side
The most important macro figures for the week were posted on Friday. The non-farm payrolls for June surged to 206K, significantly above market estimated 190K. At the same time, the unemployment rate was increased to 4.1% in June from 4.0% posted in May. These figures increased market optimism that the Fed still might cut rates in September. Other US macro data posted during the week were ISM Manufacturing PMI in June which reached 48.5, modestly lower from estimated 49.1. The ISM Services PMI in June was at level of 48.8, a bit lower from forecasted 52.5.
Inflation rate preliminary for June in Germany reached 2.2% y/y, a bit lower from estimated 2.3%. Inflation on a monthly basis was standing at 0.1%. At the same time, core inflation rate in the Euro Zone flash for June was at level 2.9%, modestly above 2.8% expected by the market. Inflation rate on a monthly basis was 0.2%, bringing yearly inflation at 2.5%. As per current market sentiment, these figures are not implying that the ECB might further cut interest rates in July, while the next cut might be probable in September, as per market estimate.
Unemployment rate in the Euro Zone remained flat in May at a level of 6.4%. Germany continues to struggle with its industrial production, as this index dropped by 2.5% in May, while the market estimated a potential increase of 0.2% on a monthly basis.
The US unemployment data impacted market sentiment where the eurusd currency pair took the upside path. The currency pair started the previous week around the level of 1.07 and moved to the highest weekly level at 1.084. With such a strong move, the RSI also took the up-path, but ended the week around the level of 60. The overbought market side has not been reached during the week, which leaves some space for such a move in the week ahead. Despite the higher volatility of the currency pair, moving averages of 50 and 200 days continued to move as two parallel lines.
Although a clear overbought side has not been reached, still, some short reversals are possible as per current charts. The market reached the level of 1.08. which needs to be tested within the next couple of days, where some volatility around this level is quite possible. However, with the same probability charts are indicating a potential for higher grounds from 1.08. Within the week ahead, the inflation rate and PPI for June will be published, which might bring back some volatility to the markets, considering the current strong sensitivity of investors to inflation figures. There is some low potential that 1.09 might be tested in the coming week, but it should be taken with a dose of reserve.
Important news to watch during the week ahead are:
Euro: Inflation Rate final for June in Germany,
USD: Fed Chair Powell Testimony is scheduled for Tuesday, while Fed Chair Powell Speech is coming on Wednesday, Inflation Rate for June, PPI for June, Michigan Consumer Sentiment preliminary for July
Inflation rate preliminary for June in Germany reached 2.2% y/y, a bit lower from estimated 2.3%. Inflation on a monthly basis was standing at 0.1%. At the same time, core inflation rate in the Euro Zone flash for June was at level 2.9%, modestly above 2.8% expected by the market. Inflation rate on a monthly basis was 0.2%, bringing yearly inflation at 2.5%. As per current market sentiment, these figures are not implying that the ECB might further cut interest rates in July, while the next cut might be probable in September, as per market estimate.
Unemployment rate in the Euro Zone remained flat in May at a level of 6.4%. Germany continues to struggle with its industrial production, as this index dropped by 2.5% in May, while the market estimated a potential increase of 0.2% on a monthly basis.
The US unemployment data impacted market sentiment where the eurusd currency pair took the upside path. The currency pair started the previous week around the level of 1.07 and moved to the highest weekly level at 1.084. With such a strong move, the RSI also took the up-path, but ended the week around the level of 60. The overbought market side has not been reached during the week, which leaves some space for such a move in the week ahead. Despite the higher volatility of the currency pair, moving averages of 50 and 200 days continued to move as two parallel lines.
Although a clear overbought side has not been reached, still, some short reversals are possible as per current charts. The market reached the level of 1.08. which needs to be tested within the next couple of days, where some volatility around this level is quite possible. However, with the same probability charts are indicating a potential for higher grounds from 1.08. Within the week ahead, the inflation rate and PPI for June will be published, which might bring back some volatility to the markets, considering the current strong sensitivity of investors to inflation figures. There is some low potential that 1.09 might be tested in the coming week, but it should be taken with a dose of reserve.
Important news to watch during the week ahead are:
Euro: Inflation Rate final for June in Germany,
USD: Fed Chair Powell Testimony is scheduled for Tuesday, while Fed Chair Powell Speech is coming on Wednesday, Inflation Rate for June, PPI for June, Michigan Consumer Sentiment preliminary for July
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