The US Dollar faced downward pressure on Friday following the release of mixed labor market data, while the euro maintained its upward trajectory.
New jobs were added to payrolls during the previous month based on new data from the Labor Department. However, this figure was significantly lower than the previously reported 272,000 for May and marked a deceleration from the previous months' robust numbers. The unemployment rate rose slightly, reaching 4.1%, compared to the forecasted 4.0%.
Some experts suggest that the Federal Reserve might begin lowering interest rates in September in response to recent economic challenges.
Currency trends
The euro had been holding steady against the US currency in the days leading to the holding of the parliamentary elections. The European Union's second-largest economy feared facing governance paralysis if none of the parties secured a majority, potentially weakening the EUR.
Still, the euro gained 1.2% against the USD in the past week due to the weakness of the greenback. On Monday, the US dollar index declined 0.28% to reach 104.87, marking a three-week low point.
Against the Japanese yen, the dollar weakened by 0.34% to 160.73. It was around 160.45 shortly after the release of the US payroll data.
In Europe, France's far-right National Rally (RN) surprisingly fell short in Sunday's election, contrary to initial poll predictions. The left-wing New Popular Front coalition claimed victory, with President Emmanuel Macron's Ensemble taking second place and the RN finishing third.
However, no party achieved a majority, which may lead to a governance impasse in the Eurozone's second-largest economy. This development is expected to put the EURUSD pair under pressure in the near term.
Meanwhile, Germany's trade balance in Europe rose in May, reaching €22.9 billion. That's over the forecast figure of €18.3 billion.
EURUSD momentum and outlook
The euro's value climbed 0.23% relative to the US Dollar, reaching a price of $1.0835 and registering its most substantial weekly growth during the current year.
EURUSD shows an upward momentum, as the Relative Strength Index (RSI) indicates. The pair will likely face resistance at 1.0843, but extended bullish control above this mark could lead to further gains and a test of the 1.0850 level.
With a decline under 1.0837, sellers will likely gain power and set their opening support at 1.0832. If selling pressure persists, there's a risk that the support will be breached, and the bullish outlook for EURUSD may no longer hold, possibly leading to a decline in value down to the next support level at 1.0826.
The market now awaits Federal Reserve Chairman Jerome Powell's Semiannual Monetary Policy testimony before Congress, which may provide further insights into interest rate expectations.
Although uncertainty remains regarding the recently held French election and its potential impact on the euro, current data suggests a weak US Dollar and a steady European economy.
Post-election impact: technical analysis
After Sunday's surprise election outcome, the EURUSD is currently showing upward momentum, supported by the RSI. It is anticipated to pivot around 1.0837, with a break above indicating buyer dominance.
The upside will likely encounter initial opposition at 1.0843, with sustained bullish momentum potentially driving the pair higher to test 1.0850. Conversely, a drop below 1.0837 would indicate seller control, likely establishing initial support at 1.0832.
Further selling pressure could break this support, nullifying the bullish outlook and potentially pushing the euro-dollar pair towards the second support level at 1.0826.
Traders are closely monitoring events in France and the Eurozone for any developments that could impact EURUSD. In the meantime, investors will continue to assess data from both sides of the Atlantic to gauge the outlook for interest rates and economic growth.
With uncertainty likely to persist, the pair may remain range-bound in the near term as market participants wait for more precise signals before taking significant positions.