EURUSD at a Crossroads Amid Euro Strength and US Job Resilience

Heading into the weekend, markets remain focused on key macroeconomic developments amid thin U.S. trading volume due to Friday’s Independence Day bank holiday. All eyes will be on ECB President Christine Lagarde’s speech Friday evening, which could offer fresh clues on the central bank’s policy stance as officials grow increasingly uneasy about the euro’s rapid appreciation.

Meanwhile, solid U.S. job growth in June reinforces expectations that the Federal Reserve will keep rates on hold in the near term, despite ongoing concerns over tariff-driven inflation. These dynamics are helping shape the trajectory of EURUSD, which continues to exhibit bullish technical momentum while flashing early signs of possible exhaustion.

High Impact Economic Events

Friday All Day – USA: Bank Holiday (USD)

Friday 21:00 (GMT+3) – Europe: ECB President Lagarde Speaks (EUR)

Chart Analysis

Following a rebound from the 50-period Exponential Moving Average (EMA) at the January 13 low of 1.10646, EURUSD has maintained a steady upward trajectory, supported by both technical and fundamental drivers. Price action remains comfortably above the 20- and 50-period EMAs, with both averages trending higher, suggesting continued bullish momentum.

Momentum indicators reinforce this view: the Momentum Oscillator remains above the 100 mark, and the Relative Strength Index (RSI) holds above the 50 line, both consistent with a strengthening uptrend. However, a developing negative divergence between the Momentum Oscillator and price action introduces caution, potentially signaling a consolidation phase or short-term pullback.

That said, a decisive break above the key resistance level at 1.18290 would likely open the door for further upside.

Key Resistance Levels

Should the buyers maintain market control, traders may direct their attention toward the four potential resistance levels below:

1.18290: The initial resistance level is established at 1.18290, which mirrors the daily high marked on July 1.

1.19402: The second price target is set at 1.19402, reflecting the weekly resistance, R1, calculated using the standard Pivot Points methodology.

1.21144: The third price objective is observed at 1.21144.

1.22286: An additional upside target is projected at 1.22286, mirroring the 423.6% Fibonacci Extension drawn from 1.16303 to 1.14454.

Key Support Levels

Should the sellers take market control, traders may consider the four potential support levels listed below:

1.16303: The initial support level is seen at 1.16303, corresponding to the swing high marked June 12.

1.14454: The second support level is estimated at 1.14454, representing the swing low marked on June 19.

1.13390: The third support level is identified at 1.13390, reflecting the weekly support, S2, estimated using the standard Pivot Points methodology.

1.10646: An additional downside target is 1.10646, mirroring the low point from May 12.

Fundamentals

US employers added 147,000 jobs in June, showing the job market remains strong even as the economy slows. That’s more than expected, and the unemployment rate fell to 4.1 percent, the lowest since February.

Most of the new jobs came from state and local government education, while federal jobs continued to decline due to major cuts. Health care added 39,000 jobs.

Experts say this solid report gives the Federal Reserve more reason to hold off on cutting interest rates for now. However, with inflation concerns tied to tariffs, economists think a rate cut may still happen later this year.

On the other side of the Atlantic, European Central Bank (ECB) officials are growing concerned that the euro is strengthening too quickly. The currency has jumped 14% against the dollar this year, reaching its highest level in nearly four years. While a strong euro helps reduce inflation by making imports cheaper, it also hurts exports and economic growth, especially as Europe faces trade tensions with the US.

Some central bankers are warning that if the euro continues to rise, the ECB may need to respond, possibly by cutting interest rates. However, any move to directly influence the exchange rate could backfire and risk sparking a currency war. ECB President Christine Lagarde noted growing investor distrust in the US dollar but did not suggest any immediate policy changes.

The main concern is that the euro’s rapid rise could drag inflation below the ECB’s target and weaken the already fragile European economy.

Conclusion

As the week draws to a close, EURUSD remains at the center of attention, navigating between a resilient U.S. labor market and growing concerns within the ECB over the euro’s rapid appreciation. Technically, the pair continues to trade with a bullish bias, though momentum signals point to potential near-term fatigue. With Friday’s light U.S. trading conditions and ECB President Lagarde’s upcoming remarks, markets may stay range-bound until new catalysts emerge. Traders should remain alert to any policy signals from Europe and shifts in sentiment tied to U.S. inflation and trade tensions, which could influence the next directional move.