EUR/USD, GBP/USD Struggle to Grind Higher as Dollar Holds Firm

EUR/USD, GBP/USD PRICE, CHARTS AND ANALYSIS:

READ MORE: Euro Weekly Forecast: EUR/USD Ends Week with a Whimper but a Recovery Remains in Play

EURUSD and GBPUSD have struggled this morning in what has been a cautious start to the week. The US Dollar has started the week on a positive note halting any attempt by the Euro or GBP bulls at a move higher following Friday’s selloff.

Currency Strength Chart Strongest: NZD Weakest: GBP

Source: FinancialJuice

A strong US jobs report and NFP print on Friday saw the dollar regain the upper hand and push EURUSD and GBPUSD back toward their weekly lows. Surprisingly however, despite the positive data market expectations for the US Federal Reserves (FED) June meeting have actually been dovishly repriced with the probability of a pause from the US Federal Reserve up to 70%. The dovish repricing could be attributable to the rising unemployment number as well as the fact that wages grew but s staring to show signs of a slowdown. All told it was an interesting jobs report if one paid closer attention to the details.

We did have some Euro Area data this morning with German exports rebounding in April following the March slump. The German export sector continues to face a barrage of hurdles as it looks to show a sustained recovery with supply chain issueS, Chinas uneven recovery as well as lower imports from China as the Asian nations expands its production capabilities thus lowering its imports from countries like Germany. The Sentix Economic Index also came out this morning indicating a continued decline in the Euro Area as economic concerns ramp up. The report cited German as the Euro Areas “problem child” with the probability of a recession in Europe’s most industrialized economy growing.

Source: Sentix

On the UK front we had the final S&P Global CIPS Services PMI data coming in slightly higher than forecast and just above the previous print of 55.1. The key findings out of the report were robust rises in output and new work, increase in staffing numbers for a fifth consecutive month and wage pressures push up cost inflation. The robustness of the UK economy on show once again but the concern will lie in wage pressure with the Bank of England (BoE) meeting drawing closer.

Another largely lackluster day ahead in terms of economic data releases with the US ISM Services PMI data the biggest risk event. Without a blockbuster print from the US service sector I wouldn’t expect a lot of change in regard to the probabilities of a rate hike in June with US CPI next week likely to hold the key.

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TECHNICAL OUTLOOK AND FINAL THOUGHTS

Looking at EURUSD and we remain trading around a key support area of 1.0680-1.0700. Last week’s candle closed as a doji at the support level hinting at signs of a potential recovery in the EURUSD price this week toward the 1.0800 handle.

The stronger US dollar this morning has so far kept any attempted push to the upside at bay. The smaller timeframes also offer up no meaningful cues as to the pairs next move with me personally looking out for a retracement to the upside. A daily candle close below the 1.0680 support handle, would no doubt invalidate my bullish bias and could facilitate a quick push toward the 1.0600 level.

For the full weekly breakdown and forecast on the EURO and EURUSD in particular read my forecast by clicking HERE.

EUR/USD Daily Chart – June 5, 2023

Source: TradingView

GBPUSD put in an impressive rally for much of last week against the greenback before running out of steam at the 1.2500 psychological level. The push lower has continued this morning with the pair now eyeing a retest of immediate support around the 1.2350 area.

Important to note that we have yet to test the 100-day MA with continued downside and a break below the 1.2350 support handle opening up a retest of the MA and potential support around 1.2200.

Alternatively, a bounce here would bring the 50-day MA back into play around the 1.2450 handle and above that the all-important 1.2500 psychological level. With little in the way of UK data this week any moves on GBPUSD could largely be dollar based, so keeping a close eye on the developments of the DXY could provide further insight into the Cables next move.

GBP/USD Daily Chart- June 5, 2023

Source: TradingView

Written by: Zain Vawda, Market Writer for DailyFX.com

Contact and follow Zain on Twitter: @zvawda