Euro Trades Higher But 1.0950 Remains Unbroken

 | May 04, 2017 06:59AM ET

The market reaction to the FOMC rate decision Wednesday was muted and provided little impetus for the U.S. dollar even though the Federal Reserve sees the recent soft U.S. economic data reports as "transitory". The Fed left its policy untouched this month and the market now expects the Fed to raise interest rates again in June. According to the Fed Fund futures, the priced-in chance of a hike in June is currently at 94 percent, and it is surprising that the market is quieter than ever.

Fed Chair Janet Yellen is scheduled to speak on Friday where she could provide further details on monetary policy.

One reason for this sluggish market is that investors remain risk-averse particularly ahead of Friday’s U.S. jobs report and the second round of the French presidential election on Sunday. Most analysts see a greater risk of a disappointing payrolls report. Traders will be closely watching the monthly jobs report after a softening in U.S. economic results including weaker growth figures from last Friday. Expectations are for an addition of 190K jobs in April, but the whisper number is currently below that.

Meanwhile, Marine Le Pen and Emmanuel Macron are entering the final stage of the French presidential campaign while Macron is still leading the polls.

Let's take a brief look at the technical picture:

EUR/USD

Following the gap from last week's market opening, the currency pair did not move much and remained trading between 1.0950 and 1.0850. If the euro climbs above 1.0965 a next hurdle is seen at 1.10. On the bottom side, we will focus on the 1.0850-support level. If the euro falls below that mark, it may tumbles towards 1.0775 and 1.07.

European Central Bank President Mario Draghi is scheduled to speak at 15:30 UTC in Lausanne, Switzerland and his comments could possibly have an impact on the euro.