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Yesterday, the ECB as expected cut key rates by a quarter point, bringing the refinancing rate to 2.15%. At the press conference, ECB President Christine Lagarde stated that rates have returned to a normal state, and market participants are now not expecting more than one additional rate cut before the end of the year. As a result, the euro rose by 26 points. This increase marked the consolidation of the price above the target level of 1.1420, opening the path to the next target at 1.1535. A consolidation above this level will set the next target at 1.1692.
The main event of the day will be the release of U.S. employment data. The Nonfarm Payrolls forecast is 127K, with the unemployment rate expected to remain unchanged at 4.2%. Wednesday's ADP report slightly alarmed investors — only 37K jobs were created in May — but based on weekly jobless claims, we remain calm and expect Nonfarm figures close to the consensus forecast. For the euro, GDP and employment data for the first quarter and April's retail sales will also be important, as mass bankruptcies in Germany (11% year-over-year), already surpassing the number during the 2008 crisis, threaten 210K jobs. As long as the price stays above the MACD line (1.1375), the euro's upward sentiment will be maintained.
On the H4 chart, the price is moving above the balance and MACD indicator lines, but a divergence has already formed between the price and the Marlin oscillator. A consolidation below the 1.1420 level could drag Marlin into negative territory, putting the 1.1375 level at risk. We are awaiting not just the release of key data from Europe and the U.S., but also the market's overall reaction to this data. A new trend may begin as early as Monday. The indicator will be the U.S. stock index S&P 500.
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