No major events expected today.

The EUR/USD pair remains under selling pressure for the second consecutive day, dropping to a three-week low during the Asian session on Monday. Spot prices are currently trading around 1.0775 and appear vulnerable to continuing the breakout momentum following the release of the NFP.

The closely-watched monthly US employment report from the Department of Labor showed that 272K jobs were added in May, compared to the expected 185K and the revised higher 175K in the previous month. Additionally, average hourly earnings surpassed the consensus estimate, growing by 4.1% over the 12 months to May, which overshadowed the rise in the unemployment rate to 4.0%.

Nevertheless, the data caused investors to abandon expectations of an imminent rate cut by the Federal Reserve (Fed) in September, maintaining US Treasury yields at a high level. This, along with cautious sentiments in the stock markets, supports the safe-haven US dollar (USD) and becomes a key factor exerting downward pressure on the EUR/USD pair.

On the other hand, the common currency is undermined by exit poll results showing that nationalist Eurosceptics achieved the most success in the European Parliament elections during Sunday’s vote.  Furthermore, French President Emmanuel Macron’s decision to call for snap elections later this month increases political uncertainty in the eurozone’s second-largest economy and favors euro bears.

This, in turn, suggests that the path of least resistance for the EUR/USD pair lies to the downside, although traders may refrain from aggressive directional bets ahead of the important FOMC policy decision on Wednesday. Ahead of this key central bank-related risk event, traders will face the release of the latest US consumer inflation data, which will stimulate the dollar and provide it with significant momentum.

Recommendations: Trade primarily with sell orders from the current price level.