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Fundamentals

During the Asian session on Monday (July 3rd), EURUSD is oscillating to the downside and is currently trading around 1.0882. The US PCE inflation data released overnight on Friday fell more than expected, and the dollar retreated sharply, which boosted the Euro, leading the EURUSD to rise as high as 1.09. As the dollar continued to rally today, EURUSD corrected Friday's gains. The exchange rate has fluctuated greatly in recent days. However, as a plummet always follows a surge, the continuity of the exchange rate is weak, which also brings certain difficulties to the transaction. However, the exchange rate still maintains a weak adjustment trend generally.

Data: Eurostat released Eurozone inflation data showing that the Eurozone CPI recorded an annual rate of 5.5% in June, lower than the expected 5.6% and the previous value of 6.1%. June CPI recorded 0.3% MoM, in line with expectations of 0.3%, higher than the previous value of 0%. Eurozone core inflation recorded an annual rate of 6.8% in June, slightly higher than expectations of 6.7% and slightly lower than the previous reading of 6.9%. Although the core inflation is still at a record high, overall eurozone inflation continues to decline. The PCE price index in the US fell to 3.8% YoY in May, and personal consumption expenditure stagnated. Eurozone harmonized CPI slowed to 5.5% YoY in June.

Traders this week need to focus on the change in US ADP payrolls for June, the US jobless claims for the week ended July 1st, the US quarterly-adjusted non-farm payrolls for June, and the US unemployment rate for June. In addition, the key data to watch this trading day include the final Markit manufacturing PMI for June and the ISM manufacturing PMI for June.

Technical Analysis

Trading at the daily timeframe, EURUSD has been in a descending channel since late June. At present, the MACD indicator has initially formed a death cross signal, which is close to the oversold zone, with a gradually exhausted upward momentum in the short term. Initial support below the intraday exchange rate is 1.0820, second support is 1.0720. The upper initial resistance is 1.0920, and the second resistance is 1.1020. If the price stays below the first resistance, the short term is expected to test the first support and hit the second resistance level.

Aggressive traders can try short positions around 1.0890, with the stop loss at 1.1020. The first target is to take profit partially at 1.0720 and change the remaining position to break even.

Trading Recommendations

Trading Direction: Short

Entry Price: 1.0890

Target Price: 1.0720

Stop Loss: 1.1020

Support: 1.0720/1.0620

Resistance: 1.0920/1.1020