Daily Analysis EURUSD - 10 July 2023

On Friday, the market experienced a significant decline after the Non-Farm Payrolls (NFP) report, reached its lowest level since June 22. This decline was influenced by the higher yields of US Treasury bonds. Despite the underwhelming US monthly jobs report, investors remain confident that the Federal Reserve (Fed) will raise interest rates later this month. As a result, the yield on the two-year US government bond, which is sensitive to interest rate changes, remains high, reaching levels not seen since June 2007. Additionally, the 10-year US Treasury yield stays above the 4.0% mark, contributing to the increased demand for the USD.

However, market participants believe that the US central bank will adopt a less hawkish stance following the expected interest rate hike in July. This belief restrains USD bulls from making aggressive bets. On the other hand, the euro (EUR) is receiving support from recent hawkish statements made by several European Central Bank (ECB) policymakers. These statements reinforce the likelihood of additional rate hikes in the ECB meetings scheduled for July and September. Consequently, the EUR/USD pair benefits from this sentiment, limiting its downside potential. As a result, cautiousness is advised for aggressive traders before taking positions, as there may not be a significant decline in the near term.

The EUR/USD, following lower-than-expected NFP data on Friday, managed to recover and surged toward the resistance level of 1.0970. Similarly, the DXY (US Dollar Index) declined and approached a significant historical area of 102.20. A correction could likely occur around these levels as the market awaits the release of the US CPI data on Wednesday, which will provide further direction for the Dollar. However, there is a higher probability of a dollar improvement in the next two days.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.1046	1.1000	1.0900	1.0860	1.0840	1.0800