The EUR/USD currency pair stopped its early-day losses and rose to 1.1275 level mainly due to the broad-based U.S. dollar weakness possibly triggered by the encouraging news related to coronavirus vaccine, which initially provided support to the U.S. stock futures. On the other hand, the Dutch Prime Minister (PM) Mark Rutte's optimistic statements about the expected E.U. recovery fund deal underpinned the shared currency and contributed to the currency pair gains.
Elsewhere, the rising number of coronavirus cases turned out to be one of the key factors that kept a lid on any additional gains in the pair At the press time, the EUR/USD currency pair is currently trading at 1.1271 and consolidating in the range between 1.1247 - 1.1276.
However, the next direction of the currency pair will be decided by the U.S. payrolls report, which is expected to show the economy added 3,000K jobs in June after May's 2509K additions. Whereas, the unemployment rate is forecasted to increase to 7.7% in June from 7.3% in May. Meanwhile, Average Hourly Earnings are expected to have risen by 5.3% year-on-year in June, marking a slowdown from May's increase of 6.7%.
This above-forecasted data will likely assist the U.S. dollar in putting a bid, which will likely push EUR/USD lower. However, the declines in the currency pair could be temporary, if payrolls lift stock markets, which will eventually force markets to offer U.S. dollars. Let me remind you; investors have treated the U.S. dollar as a haven currency since the beginning of the coronavirus crisis in mid-May.
As per the latest statement, the Dutch Prime Minister (PM) Mark Rutte said that the discussions on the European Union (E.U.) recovery fund could take time, but a compromise is possible in the coming days. However, the hopeful outlook about the potential E.U. recovery fund deal is expected to support the shared currency as the Netherlands is among the 'frugal four' countries, who remain opposed to European Commission plans for the EUR750bn post-coronavirus recovery fund.
Daily Support and Resistance
S1 1.1057
S2 1.1147
S3 1.12
Pivot Point 1.1238
R1 1.129
R2 1.1328
R3 1.1418
The EUR/USD is trading with a bullish bias around 1.1300, and it is set to complete W pattern on the 4-hour timeframe. The pair has formed a bullish engulfing candle on the hourly chart, and it has the potential to target the 1.1340 level. Technical indicators such as RSI and 50 EMA are also in support of the buying trend. It will be good to open a buy position until the release of NFP data, but you should close it before news releases as unexpected results can change its direction. Good luck!