Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0965.
- Add a stop-loss at 1.0850.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.0890 and a take-profit at 1.0835.
- Add a stop-loss at 1.0950.
The EUR/USD price bounced back on Friday after the US PCE and other economic numbers pointed to a rate hike this month. After falling to a two-week low of 1.0836 on Friday, the pair jumped to a high of 1.0930.
Muted activity expected
The EUR/USD pair will likely have a muted performance on Monday, the first trading day of the third quarter and the second half of the year. Little market action will happen because most American investors and traders will be celebrating the country’s independence day. As a result, the American market will be open for half a day on Monday and then be closed on Tuesday.
The only economic data scheduled will be the latest European and US manufacturing PMIs for June. While these numbers are important, they will have little impact on the EUR/USD pair since their impact on the ECB and Fed will be limited.
Economists expect the German manufacturing PMI dropped to 41 while the US ISM PMI rose from 46.9 in May to 47.2 in June. A PMI reading lower than 50 is a sign that an industry is contracting.
Looking ahead, the next key economic data this week will be the latest American jobs numbers scheduled for Friday. Economists believe that the unemployment rate dropped again in June as the number of jobs created eased slightly.
The labor market has been strong in the past few months, with employers adding millions of jobs this year. Further jobs numbers to watch this week will be the ADP estimate of private payrolls, job vacancies, and initial jobless claims numbers.
EUR/USD technical analysis
The EUR/USD pair bounced back after the encouraging US PCE numbers came out on Friday. On the 4H chart, the pair moved slightly above the first support level of the Andrews pitchfork indicator. It is also hovering at the 61.8% Fibonacci Retracement level and the 50-period moving average.
The Average Directional Movement Index (ADX) has dropped and reached its lowest point since June 13th.
Therefore, the pair will likely remain in this consolidation phase on Monday in a low-volume environment. As such, the key support and resistance levels to watch will be at 1.0836 (Friday low) and 1.100.
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