EUR/USD Current price: 1.0796
- Eurozone’s manufacturing sector started the third quarter on the back foot, according to HCOB.
- Tepid United States employment-related figures put modest pressure on the US Dollar.
- EUR/USD under pressure and poised to reach fresh multi-week lows.
The US Dollar changed course on Thursday, trimming the Federal Reserve’s inspired losses and even reaching fresh weekly highs against other major currencies. The EUR/USD pair fell to 1.0776 during European trading hours, its lowest in three weeks. The US Dollar found support in falling Asian equities, with the Nikkei plummeting roughly 1,000 points amid mounting speculation the Bank of Japan (BoJ) will keep tightening its monetary policy.
European stocks also came under selling pressure, providing additional support to the safe-haven US Dollar. Local stocks suffered from discouraging earnings reports and poor Eurozone figures. According to the Hamburg Commercial Bank (HCOB), “the eurozone’s manufacturing sector suffered yet another setback at the start of the third quarter as a steeper reduction in new orders led contractions in output and employment to accelerate.” The Manufacturing PMI was confirmed at 45.8 in July, unchanged from June and slightly better than the flash estimate of 45.6. The EU also reported that the Unemployment Rate increased to 6.5% in July from 6.4% in the previous month.
The United States (US) published Initial Jobless Claims for the week ended July 26, which unexpectedly rose to 249K, worse than anticipated. Additionally, US-based employers announced 25,885 job cuts in July, a 47% decrease from the 48,786 cuts announced one month prior, according to the Challenger Job Cuts report, while hiring fell to its lowest point in over a decade. Finally, Nonfarm Productivity rose 2.3% in the second quarter of the year, while Unit Labor Cost in the same period printed at 0.9%, much lower than the previous 3.8%. The US Dollar edged lower with the news, and EUR/USD recovered the 1.0800 threshold.
After Wall Street’s opening, the focus will be on the July ISM Manufacturing PMI, foreseen at 48.8 after posting 48.5 in June.
EUR/USD short-term technical outlook
The EUR/USD pair struggles to retain the 1.0800 mark, and the daily chart shows the risk remains skewed to the downside. The pair fell below a flat 200 Simple Moving Average (SMA), while the 20 SMA keeps losing upward momentum above the longer one. Even further, the pair briefly pierced a marginally bearish 100 SMA at around 1.0790. Technical indicators, in the meantime, head firmly south within negative levels, reflecting solid selling interest.
The ongoing recovery seems corrective in the near term, and according to the 4-hour chart. Technical indicators have bounced modestly from their intraday lows but remain within negative levels and lack strength enough to suggest a bottom took place. At the same time, the pair trades below all its moving averages. The 20 SMA gains downward traction, reflecting increased selling, while a flat 200 SMA provides dynamic resistance around the 1.0810 level.
Support levels: 1.0760 1.0720 1.0685
Resistance levels: 1.0810 1.0860 1.0910
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD resumes slide and nears intraday lows
The US Dollar resumed its advance after discouraging US data and as Wall Street turned south. EUR/USD accelerates below 1.0800 as recession signs outpace hopes for upcoming rate cuts.
GBP/USD trims post-BoE gains and trades below 1.2800
The Bank of England trimmed interest rates by 25 basis points early Thursday but refrained from anticipating what’s next on monetary policy. Concerns about US economic health fueled risk aversion.
Gold holds near $2,450 as US yields turn south
After falling to $2,430 earlier in the day, Gold regains its traction and trades at around $2,450 in the American session. The benchmark 10-year US Treasury bond yield is down more than 1% on the day below 4% after weak US data, allowing XAU/USD to hold its ground.
Crypto Today: Bitcoin holders accumulate without fear, Ethereum struggles while XRP holds gains steady
Bitcoin long-term holders have continued to accumulate BTC consistently in the last two months. Ethereum hovers around $3,100, struggles to make a comeback to resistance at $3,500.
Bank of England cuts rates and there are more to come this year
The Bank of England is staying tight-lipped on when it expects to cut rates again. But we think better news on services inflation and wage growth can unlock one, or more likely two rate cuts by year-end.