- Summary:
- The EURUSD currency pair declined on Thursday, as investors waited for US data to weigh against the ECB's latest pronouncement.
EURUSD declined on Thursday, trading at 1.0725 after shedding 0.1 percent in the intraday session. The currency pair is likely to continue coming under pressure as US housing and jobs data are in the pipeline. US markets had closed on Wednesday for the Juneteenth holiday, and their resumption of business could raffle a number of currencies.
The market has evidently ignored the ECB Economic Bulletin released on Thursday, which signaled the ECB’s reluctance to lower interest rates further as inflation remains sticky. Eurozone inflation stood at 2.6 percent in May, and the ECB Governing Council stated in the Bulletin that it will stick to the restrictive monetary policy until it is satisfied that inflation rates were headed to the 2 percent target.
Meanwhile, the US dollar is still reeling from the downward pressure exerted by the lower-than-expected Retail Sales data released on Tuesday. However, most Fed members have indicated that the are in no hurry to cut interest rates as long as inflation rates remain high. Despite inflation rate declining more than expected in May, Boston Fed President Susan Collins indicated on Tuesday that the Fed would need more evidence that it was headed towards the 2 percent target before slashing interest rates.
Traders will have their focus on three key data releases scheduled for Thursday. The Initial Jobless Claims fillings are forecast to decline from 242,000 to 235,000. A second successive rise in this figure could bring headwinds to the dollar and propel the EURUSD pair. Also, Building Permits are forecast to have risen by 50k in May, while Housing Starts are forecast to have risen by 10k, and investors will look at the new figured for fresh impetus.
Technical analysis
EURUSD is currently bearish, and the pivot point will likely be at 1.0721. The downside will likely prevail if resistance persists at that level, and the first support could come at 1.0713. A break below that level will likely push the pair to test 1.0706. Alternatively, a break above 1.0721 will favour the buyers to take charge, with the first resistance likely to be established at 1.0728. If the buyers breach that mark, the downside view will be invalid, and the resulting momentum could push the price to test 1.0737.
