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EUR/USD Approaches Previous Week's High as US Jobless Claims Surge
Summary:
The EUR/USD currency pair is gaining momentum and steadily approaching the high reached last week, nearing the 1.0800 mark.
CLOSED
1.07600
Opening Price
1.08200
TP
1.07200
SL
1.05619 -0.00024 -0.02%
600
Point
Profit
1.07200
SL
1.08204
Closing Price
1.07600
Opening Price
1.08200
TP
The EUR/USD currency pair is gaining momentum and steadily approaching the high reached last week, nearing the 1.0800 mark. This upward movement has been fueled by the broad decline of the US Dollar, which weakened across the board following the unexpected surge in jobless claims in the United States. In this market analysis, we delve into the impact of the US employment data on the EUR/USD pair, its implications for Federal Reserve rate hike expectations, and the contrasting economic indicators in the Eurozone.US Jobless Claims Shock the Market
The United States witnessed a sharp increase in jobless claims, reaching the highest level since October 2021. The Labor Department's weekly report revealed a significant jump to 261K for the week ending June 3, surpassing market expectations of 235K. This negative development sent shockwaves through the US Dollar, leading to a weakening against other major currencies. The DXY, a measure of the dollar's strength, dropped below 103.50 in response.
EUR/USD Benefits from Dollar Weakness
Following the release of the US employment data, the EUR/USD pair experienced a surge in upward momentum. Currently trading at 1.0770/75, it reached its highest level since the previous Friday. The broad decline of the US Dollar against other currencies has provided support for the euro's rise. The weakening dollar has made the euro more attractive to investors, driving the upward movement of the currency pair.
Impact on Federal Reserve Rate Hike Expectations
The disappointing US jobless claims figures have dampened expectations of a potential rate hike by the Federal Reserve in the near term. With the Federal Open Market Committee (FOMC) decision scheduled for Wednesday, analysts predict that the Fed will maintain interest rates at their current level. The weak employment data suggests that the labor market recovery may not be as robust as previously anticipated, prompting a cautious approach from the central bank.
Eurozone Economic Contraction and ECB Rate Hike Expectations
In contrast to the US, the Eurozone economy contracted by 0.1% in the first quarter, revised from an earlier estimate of 0.0%, according to data from Eurostat. Despite this weak activity, the European Central Bank (ECB) is expected to announce a rate hike next Thursday. ECB President Lagarde and other members of the Governing Council have emphasized the persistence of elevated inflation, which strengthens the case for a rate increase. This divergence in monetary policy expectations between the US and Eurozone further supports the euro's strength against the US Dollar.
EUR/USD Breaks Away from 1.0700 Level
The EUR/USD pair has faced resistance around the 1.0700 level in recent days but appears to be breaking out to the upside on Thursday. Driven by the strong momentum of the euro, the pair is now approaching the highs reached last week around 1.0780. If it surpasses this level, attention will shift to the 1.0800/05 range, indicating further potential gains for the euro against the US Dollar.
The EUR/USD currency pair has shown resilience and gained momentum as the US Dollar weakened in response to the unexpectedly high jobless claims. The impact of this data on Federal Reserve rate hike expectations suggests a more cautious approach from the central bank. Meanwhile, the Eurozone's economic contraction has not deterred expectations of an ECB rate hike, reflecting the focus on persistent inflation. As the EUR/USD pair approaches the previous week's high, it remains to be seen whether the momentum will continue, potentially pushing the pair beyond the 1.0800 level. Traders and investors will closely monitor these developments as they navigate the dynamic
TRADE RECOMMENDATION
BUY EURUSD
ENTRY PRICE : 1.07600
STOPLOSS : 1.07200
TAKE PROFIT : 1.08200
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Warren Takunda is an experienced financial analyst and CFO at Verge Capital in Dubai, with a proven track record in the finance industry. He leads the finance team and is responsible for financial planning, analysis, and reporting. Warren has extensive experience in financial modeling and investment analysis, which enables him to provide valuable insights to clients.
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