The EUR/USD currency pair opened the week on a positive note, trading above the 1.1400 level. This upturn is largely attributed to encouraging remarks from officials at the European Central Bank (ECB). As traders look ahead, the focus will shift to the ongoing US-China trade negotiations, which are expected to influence the performance of the US Dollar.
After experiencing a slight dip on Friday, the pair managed to secure modest weekly gains. This decline was sparked by stronger-than-expected Nonfarm Payrolls data for May, which indicated an increase of 139,000 jobs, surpassing the anticipated 130,000. Despite this positive employment news, the unemployment rate held steady at 4.2%, aligning with market expectations.
Recent comments from ECB President Christine Lagarde emphasized the continued necessity for tight monetary policy. She outlined the ECB’s commitment to maintaining restrictive interest rates until inflation is effectively curbed. Additionally, ECB Governing Council member Joachim Nagel conveyed a similar sentiment, indicating that the ECB intends to take a measured approach before making any policy adjustments. Such statements have provided a solid foundation for the EURO as the week progresses.
Looking ahead, the economic calendar appears to be light in terms of high-impact data releases. However, traders will closely monitor updates from the US-China discussions. A favorable outcome from these negotiations could bolster the USD, which may, in turn, place downward pressure on the EUR/USD pair. Conversely, if the negotiations yield inconclusive results, the USD may struggle, allowing the EURO to maintain its strength.
From a technical perspective, the Relative Strength Index (RSI) on the four-hour chart indicates a bullish underpinning, albeit with waning momentum. On the upside, important resistance levels are identified at 1.1450, 1.1500, and 1.1575. On the other hand, potential support levels are located at 1.1380, 1.1340, and the range of 1.1310 to 1.1300, providing critical levels for traders to watch.
