Technical Analysis of EUR/USD
After the strong plunge below 1.24 following the ECB rate cut by 25bp, the EUR/USD has been trading sideways in a tight range as investors are eyeing the last US unemployment report before the July FOMC meeting. With yesterday’s ADP employment data coming out much better than expected, investors are waiting for the confirmation of good jobs data today in order to gauge the possibility of another round of quantitative easing. After the EU summit euphoria faded away, the EUR/USD pair is subject to developments in the US for clear directions. In the most likely scenario that the Non Farm Payroll figures rises, QE expectations will fade away, providing further support to the greenback. With the MACD signal line hovering below zero and a downtrend capping RSI on the daily chart since the beginning of the months the technical provide a negative outlook for the pair. As the market is currently testing support at 1.2381, renewed selling from here would expose the June low at 1.2290. In the alternative scenario, short term resistance sits at 1.2430. Should the bulls take the control, we could see the pair trading all the way up to the psychologically important level at 1.2500, but it is rather hard to imagine this scenario without the Fed announcing further QE.
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