EUR/USD Forecast: EUR/USD holds in range after a disappointing US ADP survey

EUR/USD Current price: 1.0875

• The Hamburg Commercial Bank released the final estimates of the Eurozone.
• The United States ADP survey showed the economy created 152K private jobs in May.
• EUR/USD is technically neutral, with a limited bearish potential in the near term.

Financial markets were mostly quiet throughout the first half of the day, with the US Dollar achieving modest intraday gains amid prevalent caution. Still, USD gains were modest ahead of the release of United States (US) employment-related data. The EUR/USD fell towards the 1.0850 but bounced afterwards, still trading within familiar levels.

Asian stock markets edged lower, although European indexes are mostly up, as hopes of soon-to-come interest rate cuts increased. On the one hand, the ECB is set to announce its decision on monetary policy on Thursday, and is widely anticipated to trim the three main interest rates by 25 basis points (bps) each. On the other hand, the latest US tepid macroeconomic data will somehow help the Federal Reserve (Fed) decide on a rate cut before September.

The Euro suffered a setback during European trading hours following comments from European Central Bank (ECB) policymaker Peter Kasimir, who remarked that inflation is on a “good trajectory” and that the ECB is nearing its first interest rate cut. Also, the Hamburg Commercial Bank (HCOB) released the final estimates of the Eurozone May Services and Composite PMIs. German figures suffered upward revisions, although the final EU estimates came in slightly below expectations, weighing on the shared currency.

 Ahead of Wall Street’s opening, the US released the ADP survey on private job creation, showing 152K new positions were added in May, worse than the 173K expected and below the 188K posted in April. The US Dollar moved marginally lower with the news. Later in the day, the country will release the May ISM Services PMI, while S&P Global will publish the final estimate of the Services and Composite PMIs.

EUR/USD short-term technical outlook

The daily chart for the EUR/USD pair suggests buyers have paused, but bears are still moving cautiously. The pair keeps trading above all its moving averages, with the 20 Simple Moving Average (SMA) advancing above directionless longer ones. Technical indicators, in the meantime, have stalled their retracements. The Momentum indicator hovers around its 100 level, while the RSI is turning flat at around 58, limiting the downward potential.

In the near term, EUR/USD is neutral-to-bullish. The pair briefly fell below a bullish 20 SMA but quickly recovered above it. The 100 and 200 SMAs maintain their bullish slopes well below the current level. Finally, technical indicators lack directional strength but hold within positive levels, in line with diminished selling interest. Still, the pair needs to overcome the 1.0910 resistance area to be able to gain upward momentum.

Support levels: 1.0850 1.0820 1.0780  

Resistance levels: 1.0910 1.0960 1.1000