EUR/USD surged to a fresh three-week high near 1.0830 during Friday’s European session, propelled by strengthening Euro sentiment and weakening US Dollar dynamics.
The Euro gained ground ahead of the upcoming second round of French elections, bolstered by expectations that the Marine Le Pen-led National Rally would face challenges in securing a majority. Strategic candidate withdrawals aimed at thwarting the far-right’s electoral gains contributed to the Euro’s appeal.
In terms of monetary policy, speculation regarding potential ECB rate cuts in July has waned as Eurozone inflation showed resilience. June’s core Harmonized Index of Consumer Prices (HICP) grew 2.9% year-on-year, suggesting stability in inflationary pressures.
Eurozone Retail Sales data for May presented a mixed picture, with annual growth of 0.3% exceeding expectations, while monthly figures fell short, expanding by only 0.1% against a forecasted 0.2% increase.
On the US front, the Dollar faced downward pressure as markets priced in expectations of Fed rate cuts starting in September. The US Dollar Index (DXY) dropped to a three-week low near 105.00, extending losses for the seventh consecutive session. Factors contributing to Dollar weakness included subdued labor market data and a contraction in the Services PMI.
Looking ahead, market focus remains on the US Nonfarm Payrolls (NFP) report for June, anticipated to show 190K new jobs added, down from 272K in May. Additionally, attention will be on Average Hourly Earnings data, which is crucial for inflation trends.
From a technical standpoint, EUR/USD stabilized above key moving averages, including the 20-day, 50-day, and 200-day EMAs, signaling bullish momentum. The Symmetrical Triangle pattern on the daily chart suggests potential volatility ahead, with the 14-day RSI at 60.00, indicating room for continued upward momentum if it breaches this level.
Investors and traders are closely monitoring these developments, poised for potential market reactions in the aftermath of key economic releases and political events shaping currency movements.
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