Markets seem to have spent the last few weeks raising expecting a rate cut by Fed, but Friday’s strong payrolls dampen the sentiment marginally.  Friday’s strong no-farm payrolls lifted the USD near-term across the board. After the upside surprise in the June payrolls, expectations of a July rate cut by the Fed has eased dramatically.

The EURUSD dives nearly 90 pips, trading below 1.12 mark and again lost all the moving averages. The single currency suffered losses for the second consecutive day in a row last week. Overnight’s German data failed to support the price of EURUSD. May Germany Industrial Production recovered from April 2019.

In terms of macro data from last week, manufacturing PMI surveys remains in contraction. Whereas the service PMI strengthened and recorded the highest reading since November 2018.

Data review:

Eurozone Manufacturing PMI remained below the crucial 50.0, falling to a three-month low of 47.6, from 47.7 in May. Whereas turning to Service PMI, the index raised from 52.9 in May to 53.6 in June.

Chris Williamson, Chief Business Economist at IHS Markit, said: “Given the relatively weak current and future growth being signalled by the PMI and the accompanying slide in inflationary pressures, we expect to see renewed stimulus from the ECB in coming months”.

On the same note, ABN AMRO predicted a change in forward guidance on policy rates and a 10bp cut in September.

Looking at the week ahead, it’s a reasonably quiet week in terms of data, but we will see the latest ECB (Thu) and FOMC (Wed) meeting minutes.

TECHNICAL OVERVIEW

The EURUSD dives nearly 90 pips, trading below 1.12 mark and again lost all the daily moving averages. The single currency suffered losses for the second consecutive day in a row last week. As bears took control, the price broke ended below the 100MA but remains tad above crucial support finds between 1.1200-1.1180. Further weakness below the given zone is likely to retrace fully back to 1.1100 levels.

If the price starts moving upward, the key resistance levels to watch out are 1.1230 and 1.1250. A decisive break out above 1.1250 needed to change the near-term trend, and this could allow to rally to 1.1350.

We remain sidelines and waiting for a decisive break above 1.1250 for the next directional move.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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