EUR/USD Forecast: Bears hold the grip after mixed US data

EUR/USD Current Price: 1.0943

• Stocks remain on the back foot while yields surge, backing US Dollar demand.
• The Euro fell following a downward revision of the S&P Global Composite PMI.
• EUR/USD bounced from a fresh four-week low, but further advances unlikely.

The EUR/USD pair kept falling early Thursday, posting a fresh four-week low of 1.0911. The US Dollar maintains its strong footing amid persistent risk aversion and solid United States (US) employment-related figures boosting odds for more than one Federal Reserve (Fed) rate hike in the docket.

Global indexes edged sharply lower on Wednesday following a downgrade of US debt and the JOLTS Job Opening report, which showed that there are still roughly 9.6 million open positions in the economy. Meanwhile, US government bond yields extend their rallies, with the 10-year Treasury note currently yielding 4.17%, up 9 basis points (bps).

The Euro got hit by local data, as the S&P Global PMIs suffered downward revisions in July. The Eurozone final Services PMI came in at 48.6, down from the preliminary estimate of 48.9, while the Composite PMI was confirmed at 50.9 against the 51.5 anticipated. On a positive note, the June Producer Price Index (PPI) decreased by 0.4% MoM and 3.4% compared to a year earlier.

Ahead of Wall Street’s opening, the US published Initial Jobless Claims for the week ended July 28, with came in as expected at 227K. Additionally, Nonfarm Productivity rose by 3.7% in the second quarter of the year, while Unit Labor Cost in the same period was up 1.6%. Later in the American session, S&P Global will publish the July Services and Composite PMIs, while the country will release the official ISM Services PMI and June Factory Orders.

EUR/USD short-term technical outlook

The EUR/USD pair trades in the 1.0940 price zone, little changed from its early opening. The daily chart shows that it met buyers for a second consecutive day around the 100 Simple Moving Average (SMA), while the 20 SMA remains far above the current level, losing its bullish strength. At the same time, technical indicators remain well into negative territory, although they are decelerating their slides. Also, EUR/USD remains below the 61.8% Fibonacci retracement of the latest bullish run between 1.0833 and 1.1275 at around 1.1000, the level to beat to shrug off the negative stance.

Technical readings in the 4-hour chart reflect the ongoing recovery but fall short of suggesting a continued advance. EUR/USD develops below all its moving averages, with the 20 SMA heading firmly south above the current level while below the longer ones. Finally, technical indicators are in recovery mode but remain within negative levels. A downward extension through 1.0910, the immediate support level, could result in a test of the base of the aforementioned range at 1.0833.

Support levels: 1.0910 1.0870 1.0830

Resistance levels: 1.1005 1.1065 1.1105

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