- The EUR/USD pair drops after reaching a strong resistance level.
- The US economic data could be decisive today.
- Escaping from the current range could bring new trading opportunities.
The EUR/USD price is trading in the red at 1.0741 at the time of writing. The bias remains bullish as the Dollar Index struggles to post any meaningful recovery in the short term.
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Technically, the currency pair reached a resistance level, so a new sell-off is in the cards after its strong rally. Still, you’ll have to be careful as the US is to release high-impact data, which could shake the markets.
Fundamentally, the USD took a hit from the US economic figures yesterday. The ADP Non-Farm Employment Change came in at 128K in May versus 295K estimates compared to 202K in April.
Today, the US Non-Farm Employment Change is expected at 325K versus 428K in April. The unemployment rate could drop from 3.6% to 3.5%, while the Average Hourly Earnings may report a 0.4% growth in May versus 0.3% growth in the previous reporting period. In addition, the ISM Services PMI could come in at 56.5 points, while the Final Services PMI could remain steady at 53.5 points.
The EUR/USD pair slipped lower as the Eurozone data disappointed. The Retail Sales reported a 1.3% drop, Final Services came in at 56.1 below 56.3 points expected, and German Final Services PMI dropped from 56.3 to 55.0 below 56.3 estimates. In contrast, the German Trade Balance was reported at 3.5B versus the 5.6B forecasted.
EUR/USD price technical analysis: Resistance holding back gains
The EUR/USD pair rallied in the short term after finding strong support at the 1.0641 level. It has reached the 1.0757 key level, where it has found resistance. Now, it’s trading in the red, and it could come back down if the US data comes in better than expected.
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The 1.0786 higher-high stands as a key resistance as well. As you can see on the 4-hour chart, the price is trapped between 1.0786 and 1.0641. Escaping from this extended range could bring new opportunities. The 1.0696 level is seen as an immediate downside obstacle. After breaking above the flag’s resistance, the EUR/USD pair was expected to approach new highs.
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