EUR/USD Technical analysis: Bearish stability ahead of Powell’s testimony

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There will be important comments today by Federal Reserve Governor, Jerome Powell, ahead of his important testimony before the US Congress and the Senate on tomorrow and Thursday, respectively. Markets want to know the effect of recent US job numbers to the bank's policy. Prior to that, the EUR / USD pair remains committed to moving around 1.1200 psychological support. The general trend of the pair is still bearish and with technical indicators reaching oversold levels, weakness in the EUR will continue to move within its bearish channel.

The latest US jobs report, although it had mixed results between the increase of US non-farm jobs more than expected and the rising unemployment rate and lower wages than expected, still underscore the strength of the US economy after more than 10 years of steady growth. The strength of the jobs report issued by the US government on Friday could delay a decision by the US central bank later this month on interest rate cuts to help boost the economy. Most investors expected a US interest rate cut in July and possibly one or two cuts by the US central bank later this year. This scenario may be less likely now after recent job numbers.

Lagarde, director of the International Monetary Fund (IMF), was officially nominated for the post of governor of the European Central Bank (ECB), replacing Mario Draghi, whose term expires in October. The euro has not reacted so much to the announcement, as Lagarde has not announced any plans to boost the faltering European economy. The overall trend for the pair as shown on the chart below is still bearish.

Markets are constantly questioning Trump's policy and the fears still lingering over its trade file with China, as they have often been negotiating and eventually new tariffs were imposed. The continuation of the global trade war means that the Eurozone economy is slowing increasingly and the Euro may lose its recent gains and more.

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Technically: as expected, the strength of the bearish trend for the EUR/USD is now confirmed by testing the psychological support at 1.1200. Focus is now going to be on support levels at 1.1170, 1.1060 and 1.0980 respectively in case the current situation continues. The bullish correction attempts might target resistance levels at 1.1285, 1.1355 and 1.1445 as initial stops. Generally speaking, there were no signs of strong bullish correction on the way.

On the economic data front, The pair will focus on the reaction of the remarks made by Federal Reserve Governor Powell and the announcement of US employment numbers. From the Eurozone, there will be a release of investor confidence data. There are no significant US data today.

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Sara Patterson has a Master’s Degree in political science and enjoys analyzing both current events and the international markets to get a fuller perspective of the currency market. Before turning to financial writing, she taught English writing skills to high-school age students. Sara’s work has been published on various financial and Forex blogs.