Heavy Boost Fails to Spark Rescue: EUR/USD Trapped in Downtrend

Summary:

European Central Bank President Christine Lagarde said Monday in her opening remarks at the central bank’s annual retreat that Europe is becoming increasingly resilient to external shocks thanks to improvements in the financial framework and progress toward the green transition.

SELL EURUSD

EXP

TRADING

1.14139

Entry Price

1.12000

1.16000

1.14044 -0.00192 -0.17%

0.0

Pips

Flat

1.12000

Exit Price

1.14139

Entry Price

1.16000

Fundamentals

The latest survey released by the European Central Bank (ECB) shows that eurozone residents’ inflation expectations for the coming year fell significantly in May. The survey was conducted from May 7 to June 1, prior to progress being made between the U.S. and Iran on a long-term peace agreement. Specifically, respondents expected an inflation rate of 3.5% over the next 12 months, down from 4% in April. However, three-year and five-year inflation expectations remained at 2.9% and 2.4%, respectively—still at relatively high levels—and these two indicators are more relevant to monetary policy decisions.

Economists at Bank of America expect the upcoming June nonfarm payrolls report to show the creation of approximately 110,000 new jobs—a slowdown from May’s 172,000 but still a healthy pace—with the unemployment rate expected to remain stable at 4.3%. The institution highlighted downside risks, noting that the surge in employment in the leisure and hospitality sectors in May may have been driven by temporary factors such as the World Cup or Memorial Day; if the latter is the case, a “catch-up effect” could occur in June, weighing on overall employment figures.

Technical Analysis

On the daily chart for EUR/USD, the Bollinger Bands are widening downward, and the moving averages are diverging downward, indicating that the overall downtrend remains intact. The MACD fast and slow lines continue to trade below the 0 line, and the RSI stands at 36, indicating that the market is in a bearish mood. On the 4-hour chart, the Bollinger Bands are beginning to narrow, moving averages have flattened, and prices are under pressure from the EMA50. With the RSI at 52, market participants are largely adopting a wait-and-see approach. Strategically, look to sell on rallies.

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Trading Recommendation

Trading Direction: Sell

Entry Price: 1.141

Target Price: 1.12

Stop-Loss Price: 1.16

Support Levels: 1.14, 1.13, 1.12

Resistance Levels: 1.17, 1.2, 1.21

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Heavy Boost Fails to Spark Rescue: EUR/USD Trapped in Downtrend

Risk Disclosure