EURUSD: correction following Friday’s rally

75k new jobs were added to the US economy outside the agricultural sector, against an expected 185k, showing a steep decline in job growth in May. The readings for the previous two months were revised downwards by 75k. The unemployment rate came out at 3.6% as predicted, while the workforce participation rate remained unchanged at 62.8%. Average hourly earnings rose by less than expected. Overall, the report has increased expectations of a rate slash by the Federal Reserve.

Day’s news (GMT+3)

11:30 UK: GDP (Apr), industrial production (Apr), manufacturing production (Apr), trade balance (Apr)
15:15 Canada: housing starts (May)
15:30 Canada: building permits (May)
16:00 UK: NIESR GDP estimate (May)
17:00 US: JOLTS job openings (Apr)

Current situation

EURUSD

Following the ECB meeting and payrolls report, the euro has significantly improved its position against the dollar. At the time of writing, the EURUSD pair is trading at 1.1304. The economic calendar is empty today as far as the euro is concerned. As such, I expect to see a decline to 1.1275 without any pullbacks.

The current rebound has come to about 45 degree, which intersects the trend line. This is a significant support level, so we can expect an upwards rebound here. At least this is what classical technical analysis tells us. After a recovery to 1.1320, I expect to see a breakout of the trend line and a subsequent drop to 1.1290.

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