Hawkish minutes in combination with stronger-than-expected jobs gains could lift the American currency across the market
The euro fell on Friday as the US dollar surged across the board due to safe-haven demand that took the USD index back above the 105.00 mark. According to fresh data out of the Eurozone, inflation in the region surged to another record, suggesting the ECB will have to hike interest rates this month for the first time in 11 years.
EURUSD briefly derailed the 1.0370 zone to bounce back above 1.0400 on a daily and weekly closing basis due to dip buyers that prevented the shared currency from falling to fresh long-term lows. On Monday, the pair holds relatively steady, adding less than 0,1% on the day, with market focus shifting towards the FOMC meeting minutes due on Wednesday. Of note, the market is pricing in around an 85% chance of another hike of 75 basis points this month. On the data front, the highlight will be the June jobs report. The US economy is expected to have created 250,000 jobs last month, after an increase of 390,000 in May.
Hawkish minutes in combination with stronger-than-expected jobs gains could lift the American currency across the market this week, especially as investors are getting more and more worried about a possible recession globally. However, the buck could also struggle to extend the ascent should the US economy continue to signal weakness in the weeks and months ahead.
The common currency faces the immediate resistance in the 1.0450 zone while the key near-term barrier arrives around 1.0600. The euro may need some weakness surrounding the greenback in order to challenge the handle at this stage. On the downside, the EURUSD pair could derail the 1.0350 key zone if dollar demand persists.