EUR/USD Forecast Today 07/02: Declines Before NFP (Chart)

(MENAFN- Daily Forex)

• During my daily analysis of major currency pairs, the EUR/USD pair is always the first place I go.
• This gives me an approximate reading of what's going on in the US Dollar Index, as the Euro is by far the most heavily traded currency against the Greenback.
• What I find interesting is that traders are not willing to short the US dollar heading into the crucial Non-Farm Payroll announcement, which could tell us essentially what is about to happen.

While that can always be a bit of a surprise, this point in time it's very likely that traders will continue to favor the US dollar over the Euro, mainly because the divergence of the 2 central banks should continue to move things in that direction.

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During the early hours on Thursday, the Bank of England met and cut by 25 basis points. They also suggested that they were going to continue to cut, and there may have been a bit of a“read through” into this pair. After all, if the United Kingdom is starting to cut rates, and the ECB has already suggested that they might be a bit loose going forward, all things point to the US dollar being a major beneficiary of this type of action. Ultimately, the US dollar is being sought after due to the fact that the interest rate differential almost certainly favors the United States, but we also have a lot of uncertainty out there are still, and it's probably worth noting that Donald Trump is still very much in the mindset of placing tariffs on the European Union.

EURUSD Chart by TradingView

All of that being said, I do anticipate that we have a scenario that we stay somewhat range bound with more of a downward tilt. The 1.05 level above is a significant ceiling, just as the 50 Day EMA has offered quite a bit of resistance. Somewhere between those 2 levels, I would anticipate sellers jumping back into this market, barring some type of major shock. This assumes that we can rally at this point. If we were to break down from here, then I think the 1.0250 level could be the next target.

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