June 06, 2024 17:53 GMT
EURUSD Holds Narrow Range Post ECB, NFP Awaits
FOREX
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- There was a modest uptick for the single currency as the ECB’s well telegraphed 25bp cut was offset by higher-than-expected revisions to both growth and inflation for 2024 and for inflation in 2025.
- Additionally, by not committing to any particular rate path, and the confirmation of a meeting-by-meeting approach, this leaves markets unclear on the immediate next steps for the ECB’s Governing council.
- Overall, EURUSD held a narrow 40-pip range on Thursday. The brief move back above the 1.09 handle failed to garner any momentum as markets remain on the sidelines ahead of tomorrow’s key employment data from the US. Above here, the week’s high of 1.0916 precedes the more significant Fibonacci retracement at 1.0933, before 1.0964/81, the March highs.
- Separately, EURGBP continues to flirt with the key 0.8500 level, of which the pair has failed to close below since August 2022.
- The USD index sits moderately in the red as US yields continue to hover at the lowest levels of the week and major equity indices remain buoyant.
- AUD has outperformed, rising 0.35% against the dollar, which further underpins the bull cycle that started Apr 19 for AUDUSD. Short-term pull backs appear to be corrective in nature, and a continuation higher signals scope for the bull trigger to be tested at 0.6714, May 16 high.
- Friday’s release of nonfarm payrolls is expected to partially rebound in May from April’s surprisingly low 175k, with 188k in headline gains per MNI’s sell-side analyst median. While still an acceleration from the prior month, the consensus outcome if realized would be seen as reinforcing the view that the labor market has shifted into a softer but still-solid phase of growth.
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