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Markets are digesting NFP and EU elections

The week started with a slight increase in US equities, following a lower close on Friday. The US jobs report brought a positive surprise, with higher-than-expected numbers in new job creation and wage growth. However, the unemployment rate increased to its highest level since 2021.

After the release of the US Jobs Report, the Fed Fund Futures are no longer showing expectations for a faster pace of rate cuts. The probability of a rate cut in September has decreased to around 55%, and the probability of a rate cut in November has dropped to below 100%. This indicates that market participants are now anticipating only one rate cut in December.

Despite criticism regarding the jobs report, this week’s upcoming economic releases remain key. The inflation data and the Federal Reserve decision are awaited tomorrow. If inflation continues to decelerate more than expected, markets may reverse last week’s movement, as lower inflation will dampen the possibility of a quicker rate cut once again.

DXY above 105.0 once again

The US Dollar surged after the US Jobs Report, ending the week below 105.0. It continued its rally earlier this week after the EU parliamentary elections, causing the index to finish yesterday’s trading above 105.0, reaching its highest level in almost four weeks.

At present, technical indicators on the daily chart have turned slightly bullish. However, the index is currently encountering significant resistance between 105.30 and 105.50. This resistance may cap the upside potential as we await the release of US inflation data and the Federal Reserve decision.

EURUSD under pressure

The Euro started the week on a lower note, trading below 1.0750 after the EU parliamentary elections. It dropped to as low as 1.0733, causing the technical indicators to turn bearish on the daily chart. Currently, the pair is trading between the 50% and 61.8% Fibonacci levels (from April 16th low to June 4th high), which is likely to limit the downward pressure in the short term before the US economic releases later this week.

GBPUSD near 1.27 support

Earlier today, GBPUSD declined after the UK jobs report was announced. The report showed an increase in the unemployment rate to 4.4%, despite the expectation that it would remain stable at 4.3%. Additionally, Jobless Claims increased by 50,000 in May, which is higher than the 8,900 reported in April.

Currently, the technical indicators for GBPUSD have decreased, but they are still bullish on the daily chart. The pair is currently testing its short-term uptrend, which is around 1.2700. If this level holds, there is a greater likelihood of another upward movement, with the possibility of recovering last week’s losses.


Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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