- There was political tension after French President Emmanuel Macron called for a snap election.
- The euro suffered as the dollar rallied after Friday’s nonfarm payrolls report.
- Markets scaled back expectations for Fed rate cuts in 2024 from 50 to 35 basis points.
The EUR/USD outlook remains bearish as the euro hovers near a one-month low, weighed down by political uncertainty. Compounding the euro’s woes, the currency has weakened further against a robust dollar, which surged following an upbeat employment report.
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There was political tension after French President Emmanuel Macron called for a snap election. This came after the European parliamentary elections, where the right-wing parties took most of the seats. This left major powers like Germany and France in a weak position, making it more challenging to drive policy in the bloc.
Furthermore, the euro suffered as the dollar rallied after Friday’s nonfarm payrolls report. US employers hired more people than expected in May, raising doubts about a slowdown in the labor market. 272,000 more jobs were created in the US last month, well above expectations for 185,000. This was a confirmation that labor market resilience remained.
The previous report had raised expectations that the Fed would cut rates as it showed a massive miss in job growth. However, in May, the economy returned to creating many jobs that drive price increases. As a result, markets scaled back expectations for rate cuts in 2024 from 50 to 35 basis points. At the same time, the chances of a cut in September fell from 70% to 50%.
EUR/USD key events today
Investors do not expect key events today. Consequently, they will keep absorbing recent economic and political developments in the US and the Eurozone.
EUR/USD technical outlook: Bears confirm new direction with a gap below 1.0800
On the technical side, the EUR/USD price has confirmed a new direction after breaking out of consolidation. The previous bullish trend paused, and the price started trading sideways, with support at 1.0800 and resistance at 1.0900.
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Throughout this consolidation period, the price chopped through the 30-SMA while the RSI kept breaking the pivotal 50 mark. Moreover, the RSI made a slight bearish divergence with the price, showing weaker bullish momentum. This allowed bears to take control with solid momentum, leading to a gap below the 1.0800 support level. Bears are now targeting the 1.0725 support level.
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- Source: https://www.forexcrunch.com/blog/2024/06/10/eur-usd-outlook-breaks-1-08-amid-political-uncertainty/
