The EURUSD finds itself in a very strong downtrend as the U.S. economy continues to recuperate. Check out our latest comprehensive analysis of the pair to learn how far the EURUSD rebound can go.
Mixed employment data of the U.S. economy for the month of June exposes the greenback to sudden bearish pressure, as headline unemployment surprisingly rises. Nevertheless, the labour market was still able to add 850 thousand jobs last month, beating the preliminary forecasts.
The aforementioned downtrend that the EURUSD currently finds itself in is shown on the hourly chart above. It is represented within the boundaries of a descending trend line.
The downtrend itself takes the form of a major 1-5 impulse wave pattern, as postulated by the Elliott Wave Theory. Given that the structure now appears completed, it follows that a minor bullish pullback may be due next before the broader downtrend can be resumed.
Shortly after the release of the June Non-Farm Payrolls, the EURUSD rebounded from the dip at point 5. The price is currently testing the 23.6 per cent Fibonacci retracement level at 1.18463, which coincides with the upper boundary of the descending trend line.
The renewed bullish sentiment in the market is underpinned by the MACD indicator, which recorded a bullish crossover.
If the price manages to break out above said resistances, it would then likely probe higher. Depending on the underlying bullish commitment, the pullback is likely to peak either at the 38.2 per cent Fibonacci at 1.18711 or the 61.8 per cent Fibonacci at 1.19112.
The emergence of such a temporary bullish pullback entails excellent opportunities for utilising trend continuation strategies at the next swing peak.
According to the findings of the latest unemployment report of the Bureau of Labour Statistics (BLS), the U.S. economy added 850 thousand jobs last month vs 725 thousand expected.
Despite these positive findings, however, headline unemployment rose marginally by 0.1 per cent from a month prior to 5.9 per cent. This is the primary cause of the EURUSD rebound, as the preliminary forecasts were expecting unemployment to drop to 5.6 per cent.