In today's review of the main currency pair of the Forex market, we will summarize the results of the June trading to project them to the second month of summer that has started. We will also try again to understand and determine the prospect of EUR/USD in the shorter term. And, finally, let's look at the economic calendar. We will start with it.
Yesterday's data on the German labor market left a reasonably positive impression on investors. If the unemployment rate, taking into account seasonal adjustments, came out within the expectations, which were reduced to 5.9%, then the change in the number of unemployed fell immediately to minus 38 thousand with expectations of minus 20 and also taking into account the fact that the previous indicator was revised downward from minus 15 to minus 19 thousand. Let me remind you that the values for this economic indicator are lower than expected. It is a positive signal for the labor market and the economy as a whole. Now, I would like to draw your attention to yesterday's reports on the change in the number of employees in the United States from ADP. As has been repeatedly noted, these unofficial data precede the official employment reports - the well-known Nonfarm Payrolls. Thus, yesterday's reports from ADP came out much better than the forecast value of 475 thousand and amounted to 692 thousand. We are waiting for tomorrow when the US Department of Employment will publish official data for last month. In the meantime, let's see how the main currency pair of the Forex market ended the June trading.
Monthly
Last month's trading ended with a decline for the EUR/USD pair. June closed below such significant levels as 1.2000, 1.1930, 1.1900, and 1.1860. The final closing price of the first summer month was at the level of 1.1857. A very characteristic moment is that the pair did not reach the previous May highs at 1.2266 and moved from 1.2254 to a downward trend. It is also worth noting the actual absence of a lower shadow for the June candle, which indicates the players' intentions to lower the rate, which means a high probability that the movement in the south direction will continue. If so, then the next targets of the bears for EUR/USD will be 1.1800, 1.1775, 1.1745, and 1.1700.
Another bearish factor is the breakdown of the red Tenkan line of the Ichimoku indicator and the orange 200 exponential moving average with the month closing below these indicators. If we sum up the June trading, then the subsequent direction of the quote is viewed in the south direction. In other words, there is a high probability that the pair will continue to implement the downward scenario at the beginning of the month. At the same time, no one has canceled rollbacks and bounces. If this happens, then these corrective pullbacks will need to be used to open short positions, for which we will look for more accurate benchmarks on smaller timeframes. After all, a monthly chart is not at all the timeframe for opening positions. Due to its huge scale, there are always significant price flights both down and up. Thus, the point for opening a position here must be guessed. And that's what we will not do.
Daily
At yesterday's trading, the pair continued its steady downward movement and reached a significant support level of 1.1845. Now, the further short-term (and maybe not only) prospects of the euro/dollar will depend on the ability to break through this mark. If successful, further goals have already been identified at the bottom. The bulls will be saved only by a true and confident breakdown of the price zone of 1.1900-1.1910, where an important technical level and the red line of the Tenkan of the Ichimoku indicator are important. Fixing above the Tenkan will undoubtedly strengthen the bullish sentiment for the pair. Now the most important and urgent question. How to trade EUR/USD today? And again, we have to admit that there is no unambiguous answer to this question. The mood is bearish, and the main trading idea should be considered sales. However, selling the pair at the support line of 1.1845 is far from the best idea, and technically it is wrong. I suggest waiting for rebounds or corrective pullbacks to the price zones of 1.1860-1.1885 and (or) 1.1900-1.1910 and consider opening short positions. Another option for sales in the absence of rollbacks to the indicated prices will be a true breakdown of the area of 1.1845-1.1800, after which it is worth thinking about opening sales on a rollback to the broken zone. As for purchases, it's up to everyone to decide in detail. Is it worth the risk or not? But there is little doubt that there are considerable risks.
