The market’s most traded currency pair rose to the level of 1.0960 by Monday.
EUR/USD strengthened due to the weakness of the US dollar. Investors were disappointed by the flow of statistical data from the US labour market for June.
To be specific, the number of non-farm payrolls increased by only 209 thousand against the May value of 306 thousand. In private business, the number of jobs increased by 149 thousand, while in the public sector, it rose by 60 thousand. The unemployment rate remained at 3.6%. Average wages increased by 4.4% y/y against the forecast of 4.2%.
Market participants were counting on strong employment data to help them understand the future actions of the US Federal Reserve.
Technical analysis of EUR/USD:
On the H4 chart, EUR/USD secured above the upper boundary of a descending correction channel after a failed test of the support level. The price is above the moving averages, which indicates growing pressure from the buyers. The correction is expected to end at 1.0935, after which the quotes might rise to the nearest resistance level at 1.1015. Technically, this scenario is confirmed by the MACD: its signal line has secured above the zero level, and the histogram has been growing for 14 periods. A negative scenario for buyers would be a break of the lower boundary of the medium-term ascending channel with the price consolidating under the level of 1.0835.
On the H1 chart, EUR/USD is correcting within a bullish flag pattern. The target of this move is 1.0955. The completion of the pattern is expected with a breakout of the upper boundary of the descending channel and the price securing above 1.0965. The moving averages also indicate the presence of an uptrend, with a crossover that occurred on 10 July 2023. Technically, the MACD does not confirm the scenario of EURUSD growth. Moreover, there is a risk of forming a bearish divergence after a steep increase to 1.0955. With such a scenario, there is potential for a decline by the divergence. However, if the bearish divergence is broken again, such behaviour should be interpreted as a weakness on the sellers’ part.