EUR/USD Forecast: Hopes boost the pair, 1.1000 coming up next
|EUR/USD Current Price: 1.0918
- United States macroeconomic data added to speculation the end of the tightening cycle has arrived.
- The US ADP survey showed the private sector added 177K new jobs in August.
- EUR/USD turned bullish in the near term and could approach the 1.1000 mark in the near term.
The EUR/USD pair maintained its positive momentum on Wednesday, rushing through the 1.0900 threshold ahead of the American session. The US Dollar plummeted on Tuesday, following macroeconomic figures supporting the end of the tightening cycle. The Federal Reserve (Fed) has slowed the pace of rate hikes as inflation has come down, while restrictive conditions fuel the chances of an economic setback. Yet, at the same time, a tight labor market, which could push inflation back up, forced policymakers to be cautious and leave the door open for additional hikes.
News that labor demand is slowing, as reported by the Job Openings and Labor Turnover Survey (JOLTS), showed that the number of job openings on the last business day of July resulted in 8.82 million, easing from the previous 9.16 million, lifted the mood. Stock markets rallied, with Wall Street posting substantial gains, Asian and European indexes, however, were unable to follow the lead and trade mixed, as concerns about China's economic situation undermined the mood alongside European data.
The Euro Zone Economic Sentiment Indicator contracted to 93.3 in August from 94.5 in the previous month. Furthermore, Spanish and German inflation unexpectedly rose in August. Germany's Harmonized Index of Consumer Prices (HICP) rose 6.4% YoY in August vs. the 6.2% anticipated by financial markets. The figures fueled bets of a European Central Bank (ECB) 25 basis points (bps) rate hike next September.
Meanwhile, the United States (US) unveiled the ADP Survey on private job creation, which showed the sector added 177K new positions in August. Furthermore, the second estimate of the Q2 Gross Domestic Product showed the economy grew by 2.1%, below the preliminary estimate of 2.4% QoQ. The readings hit the US Dollar as market players finally foresee the end of the tightening cycle.
EUR/USD short-term technical outlook
The EUR/USD pair is firmly up for a second consecutive day, yet additional gains are not yet clear, according to technical readings in the daily chart. The pair is currently trading above a flat 20 Simple Moving Average (SMA) while approaching an also directionless 100 SMA at around 1.0930. Technical indicators, in the meantime, head higher, although the Momentum remains below its midline, while the Relative Strength Index (RSI) indicator is battling with its 50 line.
The 4-hour chart, however, supports a continued advance. Technical indicators head north almost vertically within positive levels, reflecting strong buying interest. At the same time, EUR/USD advances above a bullish 20 SMA and a mildly bearish 100 SMA. If the pair manages to hold above the 1.0900 threshold, there's a good chance it will approach the 1.1000 figure in the upcoming sessions.
Support levels: 1.0890 1.0840 1.0795
Resistance levels: 1.0930 1.0980 1.1025
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