EUR/USD Forecast: Dollar weaker but not beaten

EUR/USD Current Price: 1.0237

• The US ISM Manufacturing PMI is expected to have fallen to 52 in July.
• EU data came in mixed, although positive news underpinned high-yielding assets.
• EUR/USD is losing its positive momentum in the near term, could turn bearish below 1.0205.

The American dollar started the week on the back foot helping EUR/USD to advance up to 1.0269. Some good news underpinned the market sentiment as Ukraine has been able to deliver grains for the first time in weeks through the Odessa port. Issues around the Nord Stream 1 gas delivering pipeline continue, alongside fears of a global recession, particularly after the release of weak Chinese economic figures at the beginning of the day. The official NBS Manufacturing PMI contracted to 49 in July in the country, worse than anticipated, while the services index came in better than expected, improving to 53.8.

European data failed to impress, capping the pair’s advance. German Retail Sales were down by 1.6% MoM in June, while S&P Global downwardly revised its July Manufacturing PMIs for some European economies. The German figure, however, was upwardly revised to 49.3, while the final EU index was confirmed at  49.8.

Meanwhile, the greenback also weakened ahead of the release of the ISM Manufacturing PMI, as investors anticipated a weak outcome in July. The figure will be released after Wall Street’s opening and is foreseen at 52, down from 53 in June. S&P Global will also publish its estimate of the US manufacturing index.

EUR/USD short-term technical outlook

The EUR/USD pair trades around 1.0230 as the dollar recovered some ground. Nevertheless, and as financial markets maintain the positive tone, its gains are limited. From a technical point of view, the daily chart shows that bulls are still in control, although the positive momentum is losing steam. The pair trades above a still bearish 20 SMA while technical indicators remain flat within positive levels.

Meanwhile, the 38.2% retracement of the latest daily slide provides support around 1.0205 while holding below the 50% critical retracement at 1.0280, as the pair tested it multiple times in the last few weeks. The near-term picture also reflects decreasing buying interest, as in the 4-hour chart, the pair keeps developing above its 20 and 100 SMA, although technical indicators turned lower within positive levels.

Support levels: 1.0205 1.0160 1.0105

Resistance levels: 1.0280 1.0315 1.0360

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