Fundamental Analysis

EUR/USD longs might be concerned as the currency pair fell below the 10-day moving average (10-DMA) on Thursday, despite typically bullish factors. U.S. weekly jobless claims exceeded expectations, with the previous week's numbers revised upward, and continuing claims also increased. Additionally, the Philly Fed business index and housing starts both missed expectations on the downside. These reports bolstered investors' expectations that the Federal Reserve will cut rates twice in 2024. Despite a general rally in stocks, gold, and oil, EUR/USD failed to maintain its post-data gains and traded lower.

Technical Analysis

The EUR/USD pair remains under pressure, with technical signals maintaining a bearish outlook. Both daily and monthly Relative Strength Indexes (RSIs) are falling and are not yet in oversold territory, indicating continued downward momentum. The pair is also trading below multiple daily moving averages and the daily cloud, reinforcing the bearish sentiment. The recent rise from the June 14 low appears to be a corrective bounce rather than a sustained rally.

Price action and technical indicators suggest a higher probability of testing April's low. A break below this support could focus on the 1.0450/1.0500 range.

Recent Market Activity

• New York opened near 1.0730 after trading at 1.0749 overnight , with the slide continuing.
• The pair rallied above 1.0730 following the U.S. jobless claims, Philly Fed, and housing reports.
• Despite a dip in U.S. yields and the dollar after the data, both reversed and rallied later.
• The German-U.S. yield spreads widened, and USD/CNH rallied towards 7.2920.
• Stocks turned negative, and gold eroded some earlier gains.
• EUR/USD fell further from the 10-DMA, trading at 1.0704, down 0.37% late in the session.
• Technical indicators remain bearish, with falling RSIs and the pair below several daily moving averages and the daily cloud.

Upcoming Risks

• The June EZ HCOB PMIs and U.S. June S&P PMIs are key data risks for Friday.
• Political uncertainty continues with the French elections, raising concerns about potential fiscal policy changes that could lead to a budget crisis.

Asian Session and Future Outlook

• In Asia, EUR/USD bid ahead of a series of European PMI data, trading in a 1.0701-1.0717 range with the USD down 0.05%.
• European and U.S. Services and Manufacturing PMI data present significant data risks.
• Political risk persists with Macron's centrists lagging in French polls.
• Technical charts show slipping momentum studies, with expanding 21-day Bollinger bands and falling 10 and 21-day moving averages, indicating a net negative bias.
• The pair targets a test of 1.0594/1.0601, aligning with 0.786% of the Oct-Dec rise and April's low.
• Initial support and resistance are identified at Monday's 1.0686 low and Tuesday's 1.0761 high, respectively.
• Option strikes for June 21 include 1.0690/00 at 2.817BLN and 1.0720/25 at 1.316BLN.

In conclusion, EUR/USD faces a challenging environment with bearish technical signals and uncertainties from economic data and political risks. Traders should monitor upcoming PMI data and developments in the French elections closely.

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