A busy economic week has just started for the EURUSD, with the upcoming FOMC meeting and more ECB monetary policy decisions in the pipeline sending the pair near 1.18 tops. ‘Sell the rallies’ likely after the NFP Friday.
After the NFP, two more big economic events move the markets and EURUSD will capture the limelight – FOMC meeting and ECB monetary policy decisions to be communicated by President Mario Draghi later this week. Starting the day at 1.17675 (open, daily), EURUSD hit 1.1806 earlier on, the pair dropped slightly and hovers now above 1.17930 levels still targeting 1.18s. This surge has been prompted by ongoing weakness in the USD against its major counterparts.
Starting the day with a massive sell-off, the buck moved way down across European charts, dipping to 2-day lows at 93.76, extending its retreat from pre-NFP 2-week fresh tops at 94.08. The negative move in the dollar was influenced by the traders reacting negatively to lower than expected wage growth numbers on Friday.
As we move forward, further gains in EURUSD appear limited, with the USD supported by the US-Germany yield spread ahead of the FOMC press conference and the ECB monetary policy decisions.
Ahead of the big news and following the still hot NFP release, the markets are very likely to embrace ‘Sell the rallies’ strategy to book some near-term gains. Also, a hawkish Fed meeting outcome versus a dovish ECB monetary policy resolution holds promise for good buying opportunities in EURUSD today.
Traders will be at the same time keeping their eyes and ears open to the German ZEW economic surveys and the US inflation figures for more trading impetus. Resistance is expected to build around 1.1803 (R3) as the pair moves up.