EUR/USD And GBP/USD: Time For A Bullish Reversal?

Friday’s U.S. jobs report came in with a mixed picture. While headline figures topped forecast with 850K jobs added in June, the unemployment rate climbed to 5.9 percent, which disappointed dollar bulls and Fed hawks. The latest report was thus seen as supporting the Fed’s accommodative stance. The greenback dipped as a result.

Both EUR/USD and GBP/USD slid to fresh lows around Friday’s NFP release but found support at around 1.18 and 1.3730. Technically and with the dollar price action coming under pressure following a mixed NFP outcome, the door could be open for bullish setups now.

EUR/USD

After the euro touched the support area around 1.18 from where we saw a quick pullback, we now expect some bullish reversal towards the current resistance zone between 1.1950 and 1.20. Bears in this pair, however, may watch out for a price break below 1.1780 or alternatively a test of the current resistance zone.

GBP/USD

The cable found a support at around 1.3730 and it will be interesting whether sterling bulls are able to push the pair back above 1.3850. An upside break of 1.3865 could lead to further gains towards 1.3930 and 1.40. As long as 1.37 holds we favor small rebounds.

Summer is in the markets and given a lower-liquidity backdrop across many markets during the summer months the potential for range-bound conditions is high. We therefore recommend traders staying on the sidelines during these low-liquidity periods, taking a break from the markets and adjusting risk exposure. The next major risk event will be later in the summer with the Jackson Hole Economic Symposium August 26-28. We will take our annual trading break from August 2 to August 20 but will also adjust risk exposure in the month of July.

U.S. markets are closed today for the Independence Day holiday so trading might be thin.

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