During the last sessions, trades on majors are quite calm. A unidirectional trend is not observed. The dollar index (#DX) is consolidating in the range of 96.20-96.40.
Trade negotiations between Washington and Beijing are still in the focus of attention. It should be recalled that Donald Trump and Xi Jinping met at the G20 summit last week. The meeting, in their opinion, was productive enough. The US President made concessions to China and refused to further duties increase to reduce tensions with Beijing. China, in turn, agreed to make new purchases of US agricultural products and return to the negotiating table. We recommend following the current information on this issue.
At the moment, financial market participants have taken a wait-and-see attitude before the publication of the US labor statistics for June on Friday, July 5, at 15:30 (GMT+3:00). This report may have a significant impact on the Fed's views on the further rate of monetary policy adjustments.
Recent economic releases from the US were rather weak. In June, the consumer confidence index dropped to 121.5, which was lower than the forecasted value of 131.1. Preliminary data from ADP indicated an increase in the number of people employed in the nonfarm sector of the country by 102K compared to market expectations of 140K. ISM non-manufacturing PMI slowed down from 56.9 to 55.1.
At the same time, experts expect an improvement in key labor market indicators for June: the number of people employed in the US nonfarm sector will accelerate from 75,000 to 160,000; the growth of the average hourly earnings will be 0.3% (m/m) in comparison to the previous value of 0.2% (m/m); the unemployment rate will remain at the same level of 3.6%. We recommend paying attention to the difference between the actual and forecasted values of the indicators.
Let’s consider the current technical pattern on the EUR/USD currency pair
- Support levels: 1.12700, 1.12100, 1.11850
- Resistance levels: 1.13150, 1.13450, 1.13900
- - The price has fixed below 100 MA;
- - The MACD histogram is in the negative zone.
At the moment, the EUR/USD currency pair is consolidating. The technical pattern is ambiguous. The trading instrument is testing local support and resistance levels: 1.12700 and 1.13150, respectively. Indicators point to the power of sellers:
Nevertheless, we recommend opening positions from the key levels.
If statistics from the US turn out to be positive, we expect a further fall in the EUR/USD quotes. The movement is tending to the round level of 1.12000.
An alternative could be the recovery of the EUR/USD currency pair to 1.13600-1.13800.
Confirmations and entry points to the market should be looked for on lower timeframes. When tracking positions, we recommend using a trailing stop.
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