EUR/USD remains on the defensive below 1.0800, as it consolidates weekly gains heading into Friday’s European session. The pair takes cues from the market’s sluggish momentum amid a light calendar and repositioning ahead of next week’s top-tier EU/ US events.
EUR/USD broke above the 100-period Simple Moving Average (SMA) on the four-hour chart, currently located at 1.0740, for the first time since early May and closed the last four four-hour candles above that level. Additionally, the Relative Strength Index (RSI) indicator climbed above 60, reflecting a buildup of bullish momentum.
In case the 1.0740/50 (100-period SMA, Fibonacci 23.6% retracement of the latest downtrend) area is confirmed as support, buyers should remain interested. In that scenario, 1.0800 (Fibonacci 38.2% retracement, psychological level) and 1.0850/60 (200-period SMA, Fibonacci 50% retracement) could be seen as next bullish targets.
On the downside, EUR/USD could stretch lower toward 1.0720 (50-period SMA) and 1.0700 (psychological level) with a four-hour close below 1.0740/50.
EUR/USD broke out of its weekly trading range and reached its highest level in two weeks near 1.0790 on Thursday. The pair stages a technical correction early Friday but stays afloat above the key 1.0740/50 support area.
The number of initial claims for unemployment benefits in the US jumped to 261,000 in the week ending June 3 from 233,000 in the previous, the US Department of Labor announced on Thursday. This reading surpassed the market expectation of 235,000 by a wide margin and caused markets to lean toward a no change in the Federal Reserve’s policy rate next week. In turn, the benchmark 10-year US Treasury bond yield fell sharply and the US Dollar (USD) suffered heavy losses against its major rivals.
According to the CME Group FedWatch Tool, markets are pricing in only a 24% probability of the Fed raising the policy rate by 25 basis points on June 14.
Early Friday, the Euro Stoxx 50 Index trades flat and US stock index futures lose between 0.1% and 0.2%. In case markets remain cautious ahead of next week’s key macroeconomic events, the USD could hold its ground in the American session.
It’s also worth noting that investors could readjust positions and book some profits heading into the weekend, ramping up the market volatility later in the day.
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