The EUR/USD fell as low as 1.35018 during last weeks trading session and quickly erased losses after the ECB cut the main refinancing rate in the euro area to a record low 0.15% and imposed negative deposit rates on commercial lenders, in a bid to stimulate lending to businesses. The bank also implemented a new Long-Term Refinancing Operation, designed to help banks lend to small companies and said it would “intensify” its preparatory work on the ‘asset-backed security’ market.
A government report said last month’s U.S. jobs gains matched economist forecasts, spurring bets the Fed won’t adjust its unprecedented easing. Employers added 217,000 jobs in May, figures from the Labor Department showed. The median forecast in a Bloomberg survey of economists called for a 215,000 increase. Unemployment was unchanged at 6.3 percent.
Weekly bias remains mixed with these fundamental reports coming out from both economies, however there is more momentum to the upside as priced reached a demand zone at the 1.3476 support area. A price rejection was seen at that area on the daily charts and as long as 1.34761 support holds, weekly bias remains slightly on the upside. Moreover, price was able to breach and close above the 55 EMA on the 4 hours charts. Furthermore, a retest was seen on the 55 EMA and a bounce off was seen with 21 EMA about to make a fresh cross over the 55 EMA to the upside. MACD oscillator also shows a sign of bullish continuation is expected in the single pair.
A clear break of 1.36751 resistance (last weeks high) would resume the demand in the pair to 1.37474/1.38048 resistance areas which is 50.0/61.8 Fibonacci retracement from 1.39914 to 1.3018. When price gets to this 50.0/61.8 Fibonacci resistance areas, if we get a price action rejection pattern with a high volume supporting it, we can open a sell order position with tight stops and and a take profit all the way down to 1.34761 supports for a retest. However this methodology holds as long as 21 and 55 EMA cross over remains on the downside. If we get a successful break of 1.34761 support, then further fall to 1.32961 supports area is expected.
Key economic indicator to watch out for in the coming week is the U.S retail sales on Thursday as investors will be looking ahead to Thursday’s rep for further indications on the strength of the U.S. recovery, while the euro zone is not scheduled to release any major economic data.