The EUR/USD pair rallied today as the Dollar Index plunged. Surprisingly or not, the greenback dropped, even though the US ISM Services PMI came in at 56.7 points above 53.5 expected in yesterday's trading session.
Today, the BOE had a big impact after increasing the Official Bank Rate by 50bps as expected. The MPC members voted unanimously for this decision. Unfortunately, the UK CPI is expected to continue to grow, that's why the BOE could take action in the next monetary policy meeting again.
The US Unemployment Claims was reported at 260K in the last week below the 262K expected but above the 254K in the previous reporting period. Tomorrow, the US data could be decisive. The Non-Farm Employment Change is expected at 250K in July versus 375K in June. In addition, the Unemployment Rate could remain at 3.6%, while the Average Hourly Earnings indicator may report a 0.3% growth.
Technically, the rate is trapped between 1.0119 and 1.0269 levels. In the short term, it could continue to move sideways. Only escaping from this range could bring new trading opportunities.
It has found support on the weekly S1 (1.0130) and now it is trying to come back higher towards the 1.0269 upside obstacle. Its failure to reach this obstacle or registering only false breakouts may signal a new sell-off.
A valid breakout above 1.0269 and through the R1 (1.0290) could activate further growth. Only a new higher high could bring new long opportunities.
As long as it stays under these upside obstacles, the bias remains bearish, EUR/USD could come back down anytime.
Still, a larger downside movement and great selling opportunities could appear if the rate makes a valid breakdown below 1.0119.