EURUSD surged from the lower boundary of the trend channel after two days of negative economic surprises. The first crucial data point for this week was JOLTS job openings, which fell to 8,827k (expected: 9,500k), and the June data saw a significant downward revision of 417k. Despite the substantial decline in job openings, the numbers remained well above historical averages. Nevertheless, the substantial drop in open jobs is likely to be welcomed by the members of the Federal Reserve (FED).
In addition to the JOLTS figures, the GDP for the second quarter was revised down to 2.1% from 2.4%, and the GDP price index, a lagging yet critical inflation indicator, decreased to 2% from 2.2%. Furthermore, consumer confidence suffered a major blow, plummeting from 117 to 106.1. The swift release of these significant economic indicators that came out with negative surprises led to a decline in the dollar index and bond rates. However, two of the most crucial pieces of data for this week are still pending release: the PCE and the jobs report.
The PCE and core PCE are projected to increase by 0.2%. Year on year, they are expected to rise to 3.3% and 4.2%, respectively, due to the upward base effect beginning this month. As long as the month-on-month PCE data remains below 0.3%, it could potentially have a positive impact on EURUSD. Turning to the jobs data, nonfarm payrolls are anticipated to decrease to 170k, and average earnings to dip from 4.4% to 4.3%.
After the JOLTS and GDP data, EURUSD positioned itself favorably to make a push towards the north. The level to watch for further upward movement might be 1.0960. This level has played a significant role as both support and resistance over the past year. Currently, it finds support from the 50-day and 100-day moving averages, as well as the Fibonacci retracement level of 38.2%. If EURUSD manages to surpass this resistance and achieve a weekly close above it, it would signal positivity for Euro bulls.
The Relative Momentum Index (RMI) is also approaching a potential buy signal. Throughout this year’s uptrend channel, RMI’s buy and sell signals have been notably effective in identifying market waves. However, it’s important to note that the signal has not yet emerged and might not manifest itself for weeks if the price encounters obstacles.
On the downside, the key support level is at 1.0760. A breach of this level could potentially signify the end of the uptrend. Following that, 1.0835 could be considered as an intermediate support level.
