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Highlights
- The EUR/USD had a bearish start to the day, with inflation numbers from China weighing.
- There are no euro area economic indicators or ECB member speeches for investors to consider today.
- However, FOMC member commentary will move the dial as investors monitor responses to the US Jobs Report.
It is a quiet day ahead for the EUR/USD. There are no euro area economic indicators to move the dial. The lack of economic indicators will leave central bank chatter to influence. However, no ECB members are on the calendar to speak today. Investors should monitor commentary with the media.
While it is a quiet session, it is another busy week for the EUR/USD, with the US CPI Report a focal point on Wednesday.
Away from the economic calendar, updates on the US Treasury Secretary Janet Yellen visit to Beijing are bullish. Yellen reportedly said that 10 hours of meetings were direct and productive.
The US Session
It is also a quiet day on the US economic calendar. After the recent labor market and service sector stats, FOMC member commentary will draw interest today. FOMC members Barr, Bostic, Daly, and Mester are on the calendar to deliver speeches. The talk of consecutive rate hikes in July and September would test buyer appetite.
The US Jobs Report had a limited impact on sentiment toward the Fed policy outlook despite the nonfarm payroll numbers. Fed chatter could shift market sentiment before the US CPI Report on Wednesday.
According to the CME FedWatch Tool, the probability of a 25-basis point July Fed rate hike was 93.0% versus 86.8% one week earlier. Significantly, the chances of the Fed lifting rates to 5.75% in September stood at 24.2%, up from 20.8% one week earlier.
China Inflation Sets the Tone
In June, China registered zero inflation in June, with consumer prices falling by 0.2%. Economists forecast consumer prices to remain unchanged and for the annual inflation rate to hold steady at 0.2%.
Significantly, the Producer Price Index garnered more interest as investors fret over the economic outlook. In June, the PPI fell by 5.4% year-over-year versus a 4.6% decline in May. Economists forecast a 5.0% decline, signaling a deteriorating demand environment.
EUR/USD Price Action
This morning, the EUR/USD was down 0.09% to $1.09579.
Daily Chart
The Daily Chart showed a EUR/USD remain below the $1.10 psychological resistance level and the lower level of the $1.1000 – $1.1025 resistance band. Looking at the EMAs, the EUR/USD sat above the 50-day ($1.08661) and 200-day ($1.07289) EMAs, signaling bullish momentum over the near and longer term.
Notably, the 50-day EMA pulled away from the 200-day EMA and reflected bullish momentum.
Looking at the 14-Daily RSI, the 57.80 reading signaled a bullish trend, aligned with the 50-day EMA. A hold above the 50-day EMA ($1.08661) would support a run at the lower level of the $1.1000 – $1.1025 resistance band.
4-Hourly Chart
Looking at the 4-Hourly Chart, the EUR/USD faces strong resistance at the $1.10 psychological level.
After the Friday rally, the EUR/USD sits above the 50-day ($1.09015) and 200-day EMA ($1.08713), sending bullish signals.
Significantly, the 50-day EMA pulled away from the 200-day EMA, signaling a run at the lower level of the $1.1000 – $1.1025 resistance band.
The EUR/USD must avoid the 50-day EMA ($1.09015) to target $1.10. However, a fall through the 50-day EMA ($1.09015) would bring the 200-day EMA ($1.08713) and the upper level of the $1.0845 – $1.0825 support range into view.
The 14-4H RSI reading of 64.89 indicates a bullish stance. Notably, the RSI aligns with the 50-day EMA, supporting a run at the lower level of the $1.1000 – $1.1025 resistance band.
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