EUR/USD – What’s next after bearish engulfing candle?
EUR/USD was rejected at 1.0937 on Wednesday before falling to 1.0883 by day’s end. The bearish move engulfed previous day’s (Tuesday’s) bullish move.
The bearish engulfing candle suggests the bullish move from the low of 1.0569 (April 10 low) may have run out of steam. The move was largely a result of the broad based USD rally triggered by a sharp rise in the June rate hike bets after Fed looked through the first quarter economic weakness.
Focus on Friday’s payrolls & wage growth numbers
The Fed statement cheered the continued strength in the labor market despite slowdown in the first quarter. This has put the focus back on the NFP. A combination of strong payrolls and wage growth figures could yield another leg higher in the USD ahead of the French elections.
Caution ahead of French elections could keep USD well bid
According to a snap opinion poll by Elabe for BFMTV 63 per cent of viewers found Mr Macron more convincing than Ms Le Pen in the debate. Nevertheless, the caution ahead of the final round of the French elections on Sunday could boost demand for the safe haven treasuries and strengthen the bid tone around the US dollar. We could also see a widening of the Franco-German yield spread, leading to a drop in the EUR pairs.
EUR/USD Technical Levels
The spot was last seen trading around 1.0890. A break below 1.0880 (session low) would open up downside towards 1.0852 (Apr 27 low) and 1.0821 (Apr 24 low). On the higher side, breach of 1.0937 (previous session’s high) could yield a rally to 1.0991 (weekly 100-MA) and 1.1046 (late July low).