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  • EUR/USD is making fresh attempts to rise.
  • Fed can be on backfoot after NFP data showed a rise in unemployment.
  • ECB meeting minutes can weigh on the EUR/USD.

The EUR/USD stopped falling and is consolidating at the beginning of the new week of July. The current quote in EUR/USD is 1.1875. Friday’s statistics on the US labor market came out mixed.  Thus, the number of jobs outside the agricultural sector in June grew better than expected by 850k, after rising by 583k earlier.  This is very positive news, but this is where the “unconditional positive” ends.  The unemployment rate at the same time rose to 5.9% after the May value of 5.8%, while the expected decline to 5.6%.  Average hourly wages in the US increased 0.3% mom in June, in line with expectations, after rising 0.4% earlier.

Fed’s hawks

The FOMC hawks will have no difficulties with the argument of high inflation. According to the Dallas Federal Reserve Bank study, the truncated average value of the Personal Consumption Expenditure Index has now climbed to 1.9%. By the end of 2022, the index is capable of rising to 2.4%. The temporary PCE surge that the Fed has been fixating on until mid-June may, in fact, not be so temporary.

High inflation will have to be fought and it’s better to start doing it earlier than later. The Fed made its first step at a June 15-16, raising forecasts for the federal funds rate. The meeting minutes will be the key event of the week. We have to find answers to two important questions in the meeting. Is there a split in the ranks of the big central bank? What exactly will the officials say about the curtailment of the $120 billion quantitative easing program?

ECB meeting minutes

A day after the important event, the minutes of the June meeting of the ECB Governing Council will see the light, at a press conference following which Christine Lagarde pushed sellers to break the upward trend in EUR/USD, focusing on the divergence in the economic growth of the United States and the Eurozone.  This factor, along with the divergence in central banks’ monetary policy in the medium term, will lend a helping hand to the “bears” for the EUR/USD.

EUR/USD technical view: Will bulls fade out?

The 4-hour chart of the EUR/USD pair shows a minor consolidation but the outlook remains mildly bullish. The price retains its momentum above the 20-period SMA. However, the 50-SMA can cap further gains. If the price manages to break the level, the next destination could be the swing high at 1.1975 followed by 200-SMA and round number congestion at 1.2000. On the flip side, 1.1800 remains a key support area for the pair.

4-hour chart of EUR/USD
4-hour chart of EUR/USD

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