EUR/USD Forecast: Cautious buying ahead of fresh macro clues

EUR/USD Current price: 1.0848

• The European Central Bank decision and United States employment-related figures take centre stage.
• Updates on manufacturing output in the US and the EU are driving currencies in the near term.
• EUR/USD is mildly bullish in the near term, caution likely to limit advances.

The EUR/USD pair trades around 1.0850 ahead of the United States (US) opening, recovering from an intraday low of 1.0827, pretty much unchanged for the day. The pair seesawed between gains and losses throughout the first half of the day as investors gear up for upcoming first-tier events. Following the US inflation update on Friday, the focus shifts to growth and employment-related figures this week, alongside the European Central Bank (ECB) monetary policy meeting.

So far, the Hamburg Commercial Bank (HCOB) has released the final estimates of the Eurozone Manufacturing PMIs, with the German figure confirmed at 45.4. However, the EU index suffered a downward revision from 47.4 to 47.3 in May. S&P Global will publish the US estimate after Wall Street’s opening, while the official ISM Manufacturing PMI will be out afterwards.

Nevertheless, market players will likely wait for upcoming events before lifting directional bets. The US will publish JOLTS Job Openings, the ADP survey on private job creation, and the usual weekly unemployment data in the upcoming days, ahead of the Nonfarm Payrolls (NFP) report, which will be out next Friday. Also, the ECB is widely anticipated to trim interest rates by 25 basis points (bps) next Thursday, and it is yet to be seen how the market will react to the fact.

EUR/USD short-term technical outlook

The daily chart for the EUR/USD pair shows it met buyers just ahead of 1.0824, the 23.6% Fibonacci retracement of the rally from 1.0600 to 1.0894. The risk skews to the upside, although the momentum is missing. EUR/USD develops above all its moving averages, with a bullish 20 Simple Moving Average (SMA) converging with the mentioned Fibonacci support level while advancing above the longer ones. Technical indicators, in the meantime, stand within positive levels but without directional strength.

In the near term, and according to the 4-hour chart, it’s clear bears remain side-lined. The pair briefly fell below its 20 and 100 SMAs, but quickly recovered, while the 200 SMA aims higher, far below the current level. Finally, technical indicators turned modestly higher within positive levels, although without enough strength to confirm another leg north.

Support levels: 1.0820 1.0780 1.0740

Resistance levels: 1.0910 1.0960 1.1000