EUR/USD Rebounds as US Avoids Default, but NFPs Loom


EUR/USD Analysis

The US Senate approved the debt ceiling bill overnight [1], a day after it had cleared the House of Representatives. US President Biden spoke of a "big win for our economy and the American people", adding "I look forward" to sign the bill into law. [2]

The bipartisan resolution came after fraught negotiations and just days ahead of a potential US default that could spark global unrest, as the government could become unable to pay all of its obligations by June 5.

This comes as two Fed voters pushed back against a rate hike in the upcoming meeting, with both Mr Jefferson and Mr Harker arguing in favor of staying in the sidelines this time, but kept door open to more tightening. This caused a dovish shift in market expectations and Mr Harker doubled down yesterday, saying that it's time to "hit the stop button" this month and "see how it goes" [3]. CME's FedWatch Tool assigns the highest probabilities to rates staying at 5.25% this month and falling to 5.00% by the end of the year, but still prices in one more hike in between. [4]

The improved sentiment from the successful resolution of the debt-ceiling saga and the dovish repricing in expectations around the Fed's policy path, is an unfavorable combination for the USDOLLAR. However, today US Jobs report looms.

The outcome will likely affect the Fed's next move, market expectations of it and the trajectory of EUR/USD. The labor market has been very tight, with elevated wages and unemployment at five-decade lows. Weak results could cement a pause, but strong data can put a June hike back in play, while the positive news around the debt ceiling enable the central back to pursue a more aggressive stance.

Why Trade with FXCM

Commission free with fast, efficient execution.

Its European counterpart is clearly more aggressive and we got another round of hawkish speakers this week, including President Lagarde, who noted yesterday that "need to continue our hiking cycle" [5], while the accounts of the last decision ECB revealed "a number" of members preferring a bigger hike, than the one delivered (0.25%) [6]. However, the preliminary figures, showed a noteworthy deceleration in both headline and core CPI inflation.

EUR/USD comes from a losing month, but jumped yesterday due to the aforementioned factors, defending the critical 200Days EMA, which had contained the February-march correction. This gives the common currency the chance to reclaim the EMA200 (1.0840), but strong catalyst will be required for rebound above the daily Ichimokou Cloud (1.0980).

On the other hand, last month's drop has created scope for further losses towards the 2023 lows (1.0481), although i remain cautious for sustained weakness in that region. In any case, the next leg off the move, will likely be determined by today's NFPs.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.



Retrieved 02 Jun 2023


Retrieved 02 Jun 2023


Retrieved 02 Jun 2023


Retrieved 02 Jun 2023


Retrieved 02 Jun 2023


Retrieved 17 Jul 2024

${} / ${getInstrumentData.ticker} /

Exchange: ${}

${} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.