The US dollar has risen to a new cycle high.
On Friday, all eyes will be on the US NFP.
In terms of technical analysis, the DXY and EUR/USD are due for an interim correction.
The dollar rose on Wednesday, hitting a new high for the cycle in the New York session.
DXY, a currency index that measures a basket of currencies against the dollar, is currently trading 0.4 percent higher on the day at 92.445 after a progressive buy from the low of 92.001.
With only a few hours till the end of June, the US dollar is on the verge of posting its greatest monthly gain since November 2016.
The main driver was a sudden hawkish shift in the Federal Reserve’s rate stance. Concerns over the spread of the Delta coronavirus type earlier this week have pushed the currency even higher.
As markets rethink the US outlook, the US dollar has gained nearly 2.5 percent by the same measure.
As we move into H2, investors expect data flows to continue to reveal a solid economy, which contrasts with many other parts of the world.
As a result of the delayed vaccination rollouts, particularly in countries where the delta form is rapidly spreading, some countries have gone back into lockdown, and the greenback has gained a haven bid.
Meanwhile, after today’s ADP report showing a healthy increase in June, all eyes are on the jobs report on Friday.
According to the ADP National Employment Report, private payrolls climbed by 692,000 jobs last month.
In addition, figures for May was revised lower, showing 886,000 new jobs rather than the previously stated 978,000. Private payrolls were expected to grow by 600,000 jobs, according to economists polled by Reuters.
Concerning this week’s NFP, where payrolls are expected to rise again in June, up from +559k in May (markets expecting 700k+, Unemployment Rate 5.6%), analysts at Brown Brothers Harriman stated that the recent lower job statistics are due more to supply than demand.
“In that situation, wages will have to increase.” This could explain the predicted increase in average hourly wages to 3.6 percent year over year, up from 2.0 percent in May. Wage inflation is always the key to broad-based price inflation, and such a spike would pique the market’s interest.’
In the meanwhile, both the euro and the US dollar are expected to correct.
EUR/USD Price Analysis: According to the previous analysis, EUR/USD Price Analysis: The daily M-formation should be considered by bears, as the bulls may target the June 24th lows at 1.1917 in a strong upside correction.
The price has moved in on the 1.8140 lows of June 18 and 21.
Despite the fact that the price is likely to continue to decrease due to the negative trend, the M-formation is a chart pattern with a high completion rate.
There’s a 50/50 chance that we’ll see a correction from the current lows and support structure to the preceding support within the formation, as shown below. The upside target is set at 1.1920:

Given the DXY’s 57.6 percent weighting in the euro, it’s no surprise that we see the identical chart formation in reverse there (W-formation). The downside goal is set at 91.80s:

Prior to the 61.8 percent Fibonacci and neckline of the forms, the 38.2 percent Fibonacci retracements and the confluence of prior highs and lows serve as the initial predicted objective in both situations./nRead More