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EURUSD Steady As Weak Dollar Fundamentals Neuter France Election Jitters

EURUSD traded marginally up on Monday as the euro’s upside rally encountered headwinds brought on by the stalemate in France’s election.  The pair inched upwards to 1.0852 at the time of writing, having opened the day’s session at 1.0840. The euro gained 1.2 percent against the dollar last week as the greenback came under pressure from rising expectations of interest rate cuts.

The US dollar will likely stay under pressure this week after the mixed jobs data released last Friday. The Non Farm Payrolls numbers came in at 206k in June, beating the forecast figure of 191k. Meanwhile, the May figure was revised downwards from 272k to 218k. However, the unemployment rate rose to 4.1 percent, exceeding the forecast figure of 4 percent.

In Europe, France’s far-right National Rally (RN) failed to secure a win in Sunday’s election, in a surprise turn of events after initial polls suggested otherwise. Instead, the left-wing coalition of New Popular Front emerged victorious, followed by President Emmanuel Macron’s Ensemble, with the RN coming third. However, none of the parties was able to win a majority, putting the Eurozone’s second-largest economy in a potential governance paralysis. That will likely put the EURUSD pair under pressure in the near term.

Meanwhile, Germany’s trade balance rose by $2 billion to 24.9 in May, exceeding the forecast figure of $19.9 billion, and highlighting recovery by the Eurozone’s largest economy. That will provide support for EURUSD  as the market waits for Fed Chairman Jerome Powell’s Semiannual Monetary Policy testimony  before the congress.

Technical analysis

EURUSD currently has an upward-leaning momentum as shown by the RSI. The pair will likely pivot at 1.0837, and a move above that mark will signal control by the buyers. The upside will likely meet the first resistance at 1.0843, but extended control by the bulls at that mark could push the pair further up to test 1.0850. Conversely, a move below 1.0837 will signal control by the sellers, who will likely establish the first support at 1.0832. If the sellers extend their control, they will likely break the support and invalidate the upside view. Also, that could move EURUSD to the second support at 1.0826.