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EUR Dips Further, But Oversold Condition Could Slow Progress to Parity

FOREX
  • The greenback has resumed its deep-seated uptrend early Friday, putting the index at fresh multi-decade highs and touching 107.786. The primary driver remains EUR weakness, with the pair extending the week's losses to near parity and put prices off by over 3.5% since this time last week.
  • There are few signs of a slowdown in the downside momentum for EUR/USD - with the market focus remaining on the downtrend channel drawn off the February high. Nonetheless, the EUR/USD RSI has now dipped into oversold territory for the first time since March - which could slow downside progress, but is unlikely to stop the primary downtrend.
  • JPY is the sole currency to be outperforming the greenback ahead of the NY crossover, with negative global equity futures pointing to a lower open on Wall Street later today. This reinforces the general risk-off theme, although the e-mini S&P holds the bulk of the week's recovery headed into next week's earnings season. Markets also watch the passing of ex-PM Abe in Japan, who was shot while taking part in election campaigning.
  • Focus going forward is on the June nonfarm payrolls report, at which markets expect monthly job gains of somewhere between 250-300k. Earnings growth is expected to moderate, while the participation rate inches higher to 62.4% - equalling the post-pandemic high.
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