Euro defends the 1.1500 level ahead of a string of US labour data

EUR/USD finds support at the 1.1500 area on Tuesday after a pullback from 1.1560 highs.
Uncertainty surrounding the US-Iran conflict and caution ahead of the release of US jobs data are keeping US Dollar volatility contained.

Guillermo Alcala FXStreet

The Euro (EUR) posts marginal gains against the US Dollar (USD) on Tuesday as Monday’s reversal from three-week highs at 1.1560 has been contained at 1.1500 so far. A mild risk appetite on hopes of Iran negotiations and investors’ cautiousness ahead of the release of key US labour indicators are providing some support to the pair on Tuesday.

The Middle East conflict is in a standstill with the US and Iran holding fire so far, but each nation is sending contradictory messages. US President Donald Trump urged Tehran to sign a peace deal with the US and reopen the Strait of Hormuz. Iranian authorities, in turn, have denied any contacts with the US and reiterated their threat to the US Navy if the blockade of Iranian ports continues.

US employment figures in focus

Apart from that, the US JOLTS Job Openings and Factory Orders figures will provide some distraction from the geopolitical scenario and set the tone for a string of key US labour reports due later in the week. The main focus this week will be the Nonfarm Payrolls report, due on Friday, which is expected to provide further clues about the Federal Reserve’s (Fed) near-term monetary policy.

According to TD Securities, the recent strength in US labour demand is unlikely to persist. The bank expects that "June JOLTS job openings will decline back down to 7,000k from 7,594k in May (cons: 7,504k)," arguing that "the recent surge in openings is likely unsustainable."

Regarding the pair's near-term outlook, FX analysts at Rabobank warn that “the market continues to display a reluctance to rebuild EUR positions toward last year’s longs given uncertainty about how higher energy prices will impact the growth and inflation outlook in the Eurozone.” Against this backdrop, the bank foresees "choppy ranges, mostly within the EUR/USD 1.14/1.15 level likely to persist in the coming months,” as investors remain cautious about committing to fresh Euro exposure.

Economic Indicator

JOLTS Job Openings

JOLTS Job Openings is a survey done by the US Bureau of Labor Statistics to help measure job vacancies. It collects data from employers including retailers, manufacturers and different offices each month.

Economic Indicator

Factory Orders (MoM)

Factory orders, released by the United States (US) Census Bureau on a monthly basis, measures the change in the value of new purchased orders of manufactured goods at US factories. The data, which isn’t adjusted for inflation, is published in the monthly report on Manufacturers’ Shipments, Inventories and Orders. New orders are considered a forward-looking indicator as they hint at demand ahead for manufacturing goods and thus can be indicative of future production levels. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

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