it trades around 1.1432 on Monday. Late last week, the major currency pair posted modest gains. Weaker-than-expected US labor market data and lower oil prices have weighed on the US dollar, prompting investors to reconsider expectations for further tightening of Federal Reserve policy.
The nonfarm payrolls report released last week showed the U.S. economy added just 57,000 new jobs in June, well below the 110,000 expected, the weakest result in four months. This result has reduced the probability of a Fed rate hike as early as September.
An additional factor that weighed on the dollar was the drop in oil prices. The restoration of supplies through the Strait of Hormuz, along with expectations of higher OPEC+ production, has raised concerns about a possible global oversupply. This dynamic is helping to reduce inflation risks and the need for further rate increases.
The market's focus this week is on the release of the minutes from the Federal Reserve's June meeting. Investors are awaiting additional signals on the future path of US monetary policy and the outlook for interest rates.
Technical analysis
On the EUR/USD H4 chart, the pair is trading within a consolidation range around 1.1422, which currently extends between 1.1422 and 1.1470. A bullish breakout from this range would suggest a corrective move towards 1.1480, followed by a drop to 1.1260. A break lower would open the way for a direct move to 1.1260. The MACD indicator supports this scenario, with its signal line above zero but pointing firmly downwards, reflecting continued bearish momentum.
According to the H1 chart, EUR/USD has reached the level of 1.1470 and is now forming a consolidation range below this level. An expansion of the range to 1.1408 and to 1.1480 is expected, followed by a fall to 1.1260. The stochastic oscillator confirms this scenario, with its signal line at 50 and pointing towards 20.
Conclusion
EUR/USD remains in a tight range as markets await fresh catalysts, with attention focused on the release of the Federal Reserve minutes later this week. Last week's weaker-than-expected US jobs data and falling oil prices have eased pressure on the euro, reducing the likelihood of a rate hike in September. The restoration of Hormuz shipments and potential OPEC+ supply increases have further eased inflation concerns. However, the broader technical picture remains bearish, with indicators pointing to a possible drop to 1.1260 in the medium term. The Federal Reserve minutes will be closely watched for any changes in the political outlook that could determine the pair's next directional move.
By RoboForex Analysis Department
Disclaimer: Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
