EUR/USD Forecast: Caution prevails ahead of critical US employment figures

EUR/USD Current price: 1.1050

• The market mood remains sour amid persistent uncertainty about Fed’s next step.
• The United States will open the employment-related calendar with JOLTS Job Openings.
• EUR/USD holds steady around 1.1050, near-term risk skews to the downside.

The EUR/USD pair trades uneventfully at around the 1.1050 level on Wednesday as the dismal mood persists. Asian and European indexes edged lower following Wall Street’s decline on Tuesday, with US futures currently struggling around fresh weekly lows. The US Dollar, however, cannot benefit from risk-aversion amid mounting speculation that the Federal Reserve (Fed) may trim interest rates by 50 basis points (bps) when it meets later this month.

Ahead of the Fed’s decision, the United States (US) will publish employment-related figures that could lean the scale towards a timid 25 bps cut or a more aggressive 50 bps one. The first relevant report will be released after the American opening, as the country will unveil July JOLTS Job Openings. The ADP Employment Change report is scheduled for Thursday, while the country will publish the Nonfarm Payrolls (NFP) report on Friday.

Meanwhile, the Hamburg Commercial Bank (HCOB) released the final Services and Composite Purchasing Managers Indexes (PMIs) for the Eurozone. Services output was downwardly revised to 52.9, while the Composite PMI was confirmed at 51, below the flash estimate of 51.2. Additionally, the EU published the July Producer Price Index (PPI), which declined by 2.1% compared to a year earlier. In the month, wholesale inflation rose 0.8%, higher than the 0.3% anticipated by market analysts.

EUR/USD short-term technical outlook

From a technical point of view, the EUR/USD pair is at risk of falling further, although the bearish momentum has receded. In the daily chart, the pair is developing below a mildly bullish 20 Simple Moving Average (SMA), providing dynamic resistance at around 1.1065. Technical indicators, in the meantime, have pared their declines and stabilised right above their midlines, suggesting near-term buyers are willing to buy ahead of the 1.1000 threshold.

At the same time, the 4-hour chart offers neutral-to-bearish clues. The 20 SMA develops below the 100 SMA but has lost its downward slope. It still provides intraday resistance in the 1.1060 price zone. Finally, the Momentum indicator remains directionless around its 100 level, while the Relative Strength Index (RSI) indicator aims marginally lower ar around 39, skewing the risk to the downside.

Support levels: 1.1020 1.0975 1.0940

Resistance levels: 1.1065 1.1100 1.1145