Today in the Asian trading session, the EUR/USD currency pair stopped its early-day losses and Stood near 1.1240 level mainly due to the broad-based U.S. dollar weakness possibly triggered by the encouraging news related to coronavirus vaccine and upbeat critical data which initially provided support to the U.S. stock futures and European stocks as well.
Moreover, the reason behind the risk-on market sentiment could be attributed to the better-than-fore forecast Caixin Services Purchasing Manager's Index. At the data front, China reported a Caixin Services Purchasing Manager's Index (PMI) of 58.4 for June on the day, which surpassed the previous month's readings of 55. Let me remind you; this was the highest PMI reading in two months.
The global risk sentiment was also supported by United States Non-Farm Payrolls, which showed that the U.S. economy built 4.8 million jobs in June against market expectations of 3 million. Whereas, the previous month's reading was also recovered higher to +2.699 million as against 2.509 million reported earlier. In the meantime, the unemployment rate dropped more than expected to 11.1% from 13.3% previously, which boosted the investor's confidence as they believe that the worse of the coronavirus pandemic was behind us.
At the EUR front, the unemployment rate ticked up to 7.4% in May from 7.3% in April, a shorter increase than the 7.7% forecasted by the market. However, the currency pair did not give any major attention, at least for now.
On the other hand, the currency pair failed to cheer the latest upbeat Markit's final Services Purchasing Managers' Indexes for June, which confirmed the slow recovery – with milder contractions than previously. Spain's services PMI surprised with 50.2 points, better than 45.9 projected and indicating a return to growth."
Despite the intensifying fears of coronavirus second wave and geopolitical concerns, the broad-based U.S. dollar disappoints to extend its previous session gains and remains depressed on the day possibly due to the positive data from China and the U.S. which gave a boost to the market sentiment. Looking ahead, the traders are expected to keep their eyes on Hong Kong and virus updates. In the absence of U.S. players due to the Independence Day long weekend, the global markets may witness a dull trading session ahead.
Daily Support and Resistance
Pivot Point 1.1256
The EUR/USD is consolidating in a narrow trading range of 1.1243 – 1.1193, causing a limited price action in the pair today. Outside this range, the EUR/USD has the potential to drop until 1.1163 level, but only if it manages to violate the 1.1200 level. On the higher side, the pair still faces resistance at 1.1260 and 1.1303 levels. The RSI and 50 EMA are extending bearish bias in the pair, and these may lead the EUR/USD prices towards support levels mentioned before. Let's consider selling below 1.1250 level today. Good luck!