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EUR/USD: Hopeful for a Recovery After Setting Higher Lows

EUR/USD has been attempting to recover after Friday's US jobs report sent it down. Speculation about action from central banks is set to dominate price action today.
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FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market and was founded in 2000. The website offers a wide range of tools and resources: 24/5 currency news, real-time economic calendar, advanced rates and charts, educational webinars, analysis reports, forecasts, Learning Center, newsletters, industry services, FX customizable studies… As its distinctive trademark, the portal has always been proud of its unyielding compromise to provide neutral and unbiased information and to enable its users to take better and more confident decisions. FXStreet has managed to gain the collaboration of the entire Forex industry, from individual professionals and small companies right up to Forex Brokers and Investment Banks. FXStreet covers the FX Market 24/5: an expert team of journalists, traders and economists picture what the market is doing and what is happening as it happens. Besides the main website in English, the portal is available in 16 other languages (English, Japanese, Simplified Chinese, Traditional Chinese, Spanish, Russian, Arabic, Turkish, Indonesian, Portuguese, German, French, Italian, Hungarian and Vietnamese, Korean and Catalan). FXStreet was short listed as “Best e-FX initiative of the year (vendor)” for the FX Week e-FX Awards 2010.

  • EUR/USD has been attempting to recover after Friday’s US jobs report sent it down.
  • Speculation about action from central banks is set to dominate price action today.
  • Monday’s technical chart shows a series of higher lows – a lone bullish sign amid a bearish trend.

The Federal Reserve has 224,000 good reasons to ignore Trump and remain patient on interest rate cuts. The US economy gained that number of jobs in June – far above the 160,000 that was expected and the 120,000 that was feared.

The US labor market seems robust enough to prevent the Fed from slashing interest rates by 50 basis points at the end of this month or embarking on a long cycle of cuts. Some analysts even doubt the central bank will move forward with a single “insurance” cut.

Chair Jerome Powell will testify on Capitol Hill on Wednesday and Thursday, and markets are highly anticipating his comments. Trump has criticized the Fed for its tight monetary policy, saying, “It does not know what it is doing.” He has nominated two monetary policy doves to the bank’s Board of Governors. Christopher Waller, executive vice president at the Federal Reserve Bank of St. Louis, and Judy Shelton, who advised Trump in his campaign and previously supported a return to the gold standard – an unconventional pick.

Powell has remained fiercely independent, shrugging off the president’s criticism.

The greenback has reacted positively to the employment report, and EUR/USD has yet to recover. German industrial output has marginally missed expectations with an increase of 0.3% in May, but the euro zone’s largest economy enjoyed a broader than expected trade balance surprise of 18.7 billion euros. The mixed data has failed to cheer the common currency.

Euro traders are concerned about the next steps by the European Central Bank. The Frankfurt-based institution is set to introduce monetary stimulus amid falling inflation and trade concerns. ECB member Francois Villeroy de Galhau has reiterated the bank’s readiness to act over the weekend.

With few events scheduled on the economic calendar, markets will focus on speculation regarding the next policy moves.

EUR/USD Technical Analysis – Higher Lows

EUR USD technical analysis July 8 2019

The green arrows on the four-hour chart show higher lows – a bullish sign for EUR/USD. On the other hand, downside momentum persists and the currency pair trades below the 50, 100, and 200 Simple Moving Averages. Moreover, the Relative Strength Index (RSI) has risen above 30 –exiting oversold conditions – and indicating more drops ahead.

Support awaits at 1.1205, which was the low point on Friday. It is followed by 1.1180 that was the trough in mid-June. Further down, 1.1145 capped EUR/USD in late May and it is followed by 1.1125 and 1.1107.

Looking up, 1.1270 provided support in early July. Next up we find 1.1320 which capped it in both early July and mid-June. It is followed by 1.1350 which provided support in late June.

Equities Contributor: FXStreet

Source: Equities News

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