Welcome to this new trading week, which we hope will provide more profitable opportunities than the last consolidative week.
U.S. and U.K markets are closed today for the Memorial Day and the Spring Bank holiday, so it might be a quiet start to the new week. Later in the week, the focus turns to the May U.S. Nonfarm Payrolls report that will offer clues on the economic recovery. It will be interesting to see whether the previous disappointing job gain in April was a one-off or the start of something more persistent. Economists expect that ongoing reopening in the U.S. will pull a significantly higher number of Americans into employment in May, so Friday’s job report shouldn’t be as disappointing as the previous one.
The latest consolidative phase leaves prices confined to a sideways trading range between 1.4240 and 1.4090. Once that price range is broken, we expect a higher target to be at 1.43. On the downside and with a break below 1.4090, a next support may come in at around 1.4050.
Looking at longer time frames it seems as if bullish momentum is fading with the pair being on overbought territory. While 1.23 remains a next target to watch out for, sentiment could quickly change in favor of the bears if the euro is unable to overcome 1.2250. Below 1.2050, the euro could fall towards 1.1950 and 1.1850.
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