EUR/USD Forecast: Upbeat US data support further dollar gains
EUR/USD Current Price: 1.1828
- US employment-related data beat expectations, hinting an encouraging NFP.
- Markit reported that services output in some European countries fell back into recession.
- EUR/USD bounced from daily lows at 1.1788, but the risk remains skewed to the downside.
The American dollar remains the strongest this Thursday, resulting in EUR/USD pair falling to 1.1788 during European trading hours. The ECB is partially responsible for the EUR’s weakness, as policymakers have been expressing their concerns about the latest euro’s appreciation, warning that further gains would weigh on exports and bring down prices. The comments surged after EUR/USD hit 1.20, which has become a line in the sand.
During the European session, Markit released the final versions of the Services PMIs for the Union, with most of them suffering downward revisions. Worth mention, services output in Italy and Spain fell into contraction territory. However, the German index was upwardly revised to 52.5 from 50.8. The final EU figure was also better than initially estimated, revised from 50.1 to 50.5. Meanwhile, EU Retail Sales were down 1.3% MoM in July and up by 0.4% when compared to a year earlier, missing the market’s expectations.
The US has just published some encouraging employment-related numbers, as Initial Jobless Claims for the week ended August 28 decreased to 881K, the lowest reading since the beginning of lockdowns back in March. Nonfarm Productivity in Q2 improved 10.1%, beating expectations, although Unit Labor Cost in the same quarter was down to 9% from12.2% in the previous quarter.
EUR/USD short-term technical outlook
The dollar came under mild pressure with the encouraging news, helping EUR/USD to recover to the current 1.1830 price zone. Still trading in the red daily basis, the 4-hour chart shows that the risk is still skewed to the downside, as the pair trades below its 20 and 100 SMA, with the shortest gaining bearish traction. The Momentum indicator, in the meantime, retains its strong bearish slope well into negative territory, while the RSI indicator has turned flat around 40.
Support levels: 1.1790 1.1755 1.1710
Resistance levels: 1.1840 1.1880 1.1925
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Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
