EUR/USD Slumps on Strong US NFPs & European Elections Jitters


EUR/USD Analysis

Friday's data reaffirmed the robust state of the US labor market, with 272,000 jobs added in May and an uptick in wages, despite higher unemployment. The report strengthens the case for the Fed's reserved approach towards removing monetary restraint and the greenback, as markets now price in just one rate cut this year (from tow previously).

The European Central Bank may have adopted a cautious approach towards lower rates, but still became the first major central bank to cut rates and pivot to a less restrictive stance [1]. The policy differential remains unfavorable for the pair, which is also weighed by political uncertainty. President Macron called snap elections after his party's heavy defeat in the European elections, which showed a broader rise of the far-right. [2]

EUR/USD takes a nosedive towards 1.0694, weighed by these negative forces, although the 2024 lows (1.0600) have a higher degree of difficulty. On the other hand, the ECB will move carefully form here on and the Fed is still expected to cut rates within the year. On the technical front, the Relative Strength Index (RSI) points to oversold conditions and along with the daily Ichimoku cloud could help EUR/USD reclaim the EMA200, but dos not inspire confidence for sustained recovery.

There multiple high-impact events this week that can spark volatility and determine the trajectory of the pair. The Fed's is unlikely to move on rates, but its intentions and the dot-plot will be closely watched. Earlier in the same day, we expect the crucial CPI inflation update.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.



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