EUR/USD Daily Forecast – Euro Falls Back Ahead of ECB meeting

The EUR/USD streak continued yesterday as the currency pair posted an eighth straight day of gains. The pair has advanced more than 3% from its low last week.

Sellers have stepped in to cap the pair near the 1.1250 price point ahead of today’s ECB meeting and tomorrow US jobs report, two events that stand to determine the near-term fate of the currency pair.

Jobs data from Europe yesterday came in better than expected as the unemployment rate was reported at 7.3% in April while analysts were calling for a rise to 8.2%.

In a similar fashion, The ADP jobs report showed 2.76 million people losing their jobs in May which was significantly lower than the forecast of 9 million jobs lost.

This could be setting the stage for Friday’s NFP report which has been estimated to show 8 million jobs lost in May and a rise in the unemployment rate to 19.5%.

Yesterday’s data hints that Friday’s jobs report could come in better than expected which would be positive for the dollar.

One of the factors driving the EUR/USD rally is further easing expectations from Europe. In today’s ECB meeting, any deviation from that stance stands to be negative for the single currency.

Technical Analysis

EUR/USD looks to be in an attractive position where bears may look to try a short position.

The pair shows slowing momentum against a key level at 1.1240 which capped the rally that took place in the fourth quarter of 2019.

On a 4-hour chart, the pair is trending lower although the momentum is lacking. The price action during, and after the ECB rate announcement and press conference will be more meaningful.

The pair shows strong support at 1.1200 considering the psychological implications of the level. Further, it carries confluence with the lower bound of a trend channel that has encompassed price action since late May.

A break below this level could provide early signs of a turn. While above it, a major barrier to the upside remains at 1.1239.

Bottom Line

• EUR/USD shows some signs of slowing after posting eight consecutive daily gains.
• The ECB will share its monetary policy plans today which stands to set the near-term tone for the pair. Traders may look to position for Friday’s jobs report after the ECB press conference concludes.

For a look at all of today’s economic events, check out our economic calendar.