EUR/USD Retraces to 1.0695, Extending Losses on Hawkish Fed Sentiment
Arslan Butt • 1 min read
EUR/USD faces downward pressure for the second consecutive day as it heads into Monday’s European session, maintaining minor losses. The pair takes cues from the market’s hawkish bias surrounding the Federal Reserve (Fed), particularly following Friday’s robust US Nonfarm Payrolls (NFP) report.
Over the weekend, International Monetary Fund (IMF) Managing Director Kristalina Georgieva commented on the need for the Fed to take further action to control inflation. The recent rise in US NFP to a four-month high strengthens the hawkish Fed sentiment, contributing to the recent strength of the US Dollar Index (DXY).
Additionally, the DXY benefits from the extension of the US debt ceiling and concerns over geopolitical tensions involving the US, China, Taiwan, and Russia-Ukraine, all of which dampen market sentiment and support the bearish outlook for EUR/USD .
Furthermore, disappointing growth and inflation figures from the Eurozone favor the Fed hawks and exert downward pressure on EUR/USD.
Looking ahead, EUR/USD remains under pressure, targeting the previous monthly low around 1.0635. Traders are closely watching the US ISM Services PMI and Factory Orders data for May. Positive outcomes from these reports may reinforce the bearish sentiment for the Euro.
The EUR/USD pair closed below the 1.0730 level, signaling a resumption of the bearish trend. The price is expected to continue its downward trajectory, with initial targets at 1.0650 and 1.0520 after breaking the previous level.
Breaching 1.0730 could halt the current negative pressure and potentially lead to a recovery in the price.
The expected trading range for today is between 1.0610 support and 1.0760 resistance.