CFD Trading Rate Euro vs US Dollar (EURUSD)

Significantly weaker than expected French and German Industrial Production data for July will lift concerns about the lack of momentum in the Eurozone economy but the data barely had an impact on the EUR which touched 1.1120 earlier before edging marginally lower, Scotiabank’s Chief FX Strategist Shaun Osborne notes.  

Renewed upside momentum in the EUR

“Lower USD yields and narrower EZ/US short-term spreads (2Y at –145bps) have provided the essential support for the EUR’s recent gains and the US rate outlook will continue to drive spot moves in the short run.”

“Spot gains through the low 1.11 zone is helping support renewed upside momentum in the EUR on the short-term chart and aligning the intraday DMI with the bullish orientation of the daily and weekly studies. The technical picture suggests limited downside potential for the EUR and keeps the broader outlook positive.”

“Resistance is 1.1200 but a weekly close above 1.1160 or so would be constructive from a technical point of view.”

The Euro (EUR) continued to inch higher amid broad USD softness, OCBC Frances Cheung and Christopher Wong note.

NFP may move EUR/USD

“Pair was last seen at 1.1110. Bearish momentum on daily chart shows signs of fading while RSI rose slightly. US data risk matters and as such USD moves will dictate direction. Resistance at 1.12 (recent high) and 1.1280 (2023 high).”

“Support at 1.1026 (recent low), 1.10, 1.0930 (61.8% fibo retracement of 2024 high to low). Today brings GDP (Fri). Underwhelming data print could move the needle for markets to price in a more dovish ECB.”

• EUR/USD extends its upside above 1.1100 as signs of a slowdown in US labor demand weigh on the US Dollar.
• Investors await the US NFP for August as markets wonder if July’s report was just a bump or the start of a more serious deterioration.
• The ECB is expected to cut interest rates two more times this year.

EUR/USD extends its winning spree for the third consecutive trading session on Friday, trading close to a fresh weekly high of 1.1120. Decent gains in the shared currency pair are driven by sheer weakness in the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slides further below the crucial support of 101.00.

The appeal for the US Dollar has weakened after United States (US) JOLTS Job Openings data for July and the ADP Employment data for August, released earlier this week, deepened fears of deteriorating labor market conditions. Fresh job vacancies and additions of payrolls in the private sector stood at 7.67 million and 99K, respectively, the lowest in more than three-and-a-half years. 

The US ISM Services Purchasing Managers’ Index (PMI) data for August came in better than projected but failed to cushion the US Dollar.

Signs of slowing labor demand prompted market expectations that the Federal Reserve (Fed) could start cutting interest rates aggressively. According to the CME FedWatch tool, the possibility for the Fed to begin reducing interest rates by 50 basis points (bps) to 4.75%-5.00% has increased to 41% from 34% recorded a week ago. 

For more cues on the interest rate path, investors will focus on the US Nonfarm Payrolls (NFP) data for August, which will be published at 12:30 GMT. The official employment data is expected to show that US employers hired 160K job-seekers, higher than July’s reading of 114K. The Unemployment Rate is estimated to have declined to 4.2% from the former release of 4.3%. 

Investors will also focus on the US Average Hourly Earnings data, a key measure of wage growth that influences consumer spending. Earnings are expected to have accelerated to 3.7% from 3.6% in July on a year-on-year basis. The wage growth measure is seen growing by 0.3% on the month, faster than the prior increase of 0.2%.

Daily digest market movers: EUR/USD rises as US Dollar weakens

• EUR/USD rises on sheer weakness in the US Dollar ahead of the US NFP data. By itself, the Euro (ECB) exhibits a mixed performance against its major peers as traders aren’t sure about the European Central Bank (ECB) interest rate path for the remainder of the year.
• The ECB is widely anticipated to cut interest rates again in the September meeting. The central bank started the policy-easing process in June but kept its key borrowing rates unchanged in July. For the last quarter of this year, traders remain split on whether the ECB will cut in the November or December meeting, or in both of them.
• Economists at Bank of America (BofA) said in their latest viewpoint on the Eurozone: "We still see more cuts in 2025/26 than the markets are pricing, with a return to a deposit rate of 2% by 3Q25 (at the latest) and to 1.5% in 2026." BofA analysts said that the recovery in the Eurozone remains fragile and will likely be shallow, pressured by several economic factors including slowing growth in China as well as political factors.
• Further evidence of economic struggle came from the Eurozone’s two largest economies. Industrial production in Germany fell 2.4% on month in July, much more than the 0.3% decline expected by economists. In France, Industrial Output fell by 0.5%.
• According to a Reuters poll carried out between August 30 and September 5, 85% of economists anticipate that the ECB will cut interest rates next week and again in the December meeting.
• Meanwhile, most ECB officials seem to be comfortable with market speculation for interest rate cuts as they remain worried about growing risks to Eurozone economic growth. ECB Executive Board member Piero Cipollone said in an interview with a French newspaper this week that "there is a real risk that [the ECB] stance could become too restrictive."

Technical Analysis: EUR/USD holds gains above 1.1100

EUR/USD remains steady above the round-level figure of 1.1100. The near-term outlook of the major currency pair remains firm as it manages to gain firm footing near the 20-day Exponential Moving Average (EMA) around 1.1055. 

The longer-term outlook is also bullish as the 50-day and 200-day EMAs at 1.0970 and 1.0865, respectively, are sloping higher. Also, the shared currency pair holds the Rising Channel breakout on a daily time frame. 

The 14-day Relative Strength Index (RSI) has declined below 60.00 after turning overbought near 75.00.

On the upside, the recent high of 1.1200 and the July 2023 high at 1.1275 will be the next stop for the Euro bulls. Meanwhile, the downside is expected to remain cushioned near the psychological support of 1.1000.

• EUR/USD consolidates its recovery gains from over a two-week low touched Tuesday. 
• Investors keenly await the US employment details before placing fresh directional bets. 
• The setup favors bullish traders and supports prospects for a further appreciating move.

The EUR/USD pair struggles to capitalize on its gains registered over the past two days and oscillates in a narrow trading band during the Asian session on Friday. Spot prices, meanwhile, manage to hold above the 1.1100 round figure, nearly unchanged for the day as traders opt to wait for the release of the US Nonfarm Payrolls (NFP) report before placing fresh directional bets. 

From a technical perspective, the recent recovery from the 1.1075-1.1070 area, or over a two-week low touched on Tuesday, stalls near the 50% Fibonacci retracement level of the latest corrective slide from the YTD peak touched in August. That said, the overnight breakout through the 1.1090-1.1095 confluence resistance – comprising the 38.2% Fibo. level and the 50-period Simple Moving Average (SMA) on the 4-hour chart – favors bullish traders. 

Moreover, oscillators on the daily chart are holding in positive territory and are still far from being in the overbought zone. This, in turn, validates the positive outlook and suggests that the path of least resistance for the EUR/USD pair is to the upside. Bulls, however, need to wait for a sustained move beyond the 50% Fibo. level resistance before placing fresh bets and positioning for further strength towards the 61.8% Fibo. level, around the 1.1135 region.

The subsequent move-up should allow the EUR/USD pair to aim back towards retesting the YTD peak, around the 1.1200 mark touched in August. Some follow-through buying will confirm a fresh breakout and lift the EUR/USD pair further towards the 1.1240-1.1245 intermediate barrier en route to the July 2023 swing high, around the 1.1275 region. 

On the flip side, the 1.1095-1.1090 confluence resistance breakpoint now seems to act as immediate support ahead of the 23.6% Fibo. level, around the 1.1070-1.1065 region. A convincing break below the latter will expose the weekly low, around the 1.1025 area touched on Tuesday, before the EUR/USD pair drops to the 1.1000 psychological mark. The latter should act as a pivotal point, which if broken might shift the near-term bias in favour of bearish traders.

EUR/USD 4-hour chart

• EUR/USD rose on Thursday, climbing back over 1.1100.
• Gains remain limited after miss in EU Retail Sales.
• US NFP print due on Friday takes the center stage for the week.

EUR/USD stepped into a second straight day of gains on Thursday, recapturing the 1.1100 handle as markets broadly sell off the Greenback in advance of Friday’s hotly-anticipated US Nonfarm Payrolls (NFP) jobs report. Markets are looking for further signs that the Federal Reserve (Fed) is on pace to deliver an initial rate trim and kick off a rate cutting cycle in September, but US data will need to continue softening to keep rate cut hopes on the high side.

European economic data did little to provide additional support for the Fiber after July’s EU Retail Sales missed the mark. YoY Retail Sales came in worse than expected, printing at -0.1% for the year ended in July and missing the expected rebound to 0.1% compared to the revised last -0.4% contraction.

According to payroll processor ADP, the US added 99K net new jobs in August, down from July’s revised 111K and well below the expected 145K. August’s ADP additions are the lowest print since early 2021, sparking a fresh round of risk aversion and reigniting investor concerns that the US could be heading into a recession.

The ADP jobs report serves as a bellwether for what markets can expect from Friday’s upcoming US NFP report, albeit one with a wobbly track record for accuracy. August’s NFP print represents the last significant labor update before the Federal Reserve’s (Fed) upcoming rate call on September 18, when Fed policymakers are broadly expected to kick off a rate-cutting cycle.  Friday’s NFP print is slated to come in at 160K compared to the previous month’s 114K. 

According to the CME, rate markets are currently betting on 40% odds that the Fed will blow the doors open with a 50 bps cut later in the month. The remaining 60% are betting on a more demure 25 bps opening rate trim. Investors are anticipating using this Friday’s NFP print as a way to gauge the depth of the Fed’s first rate cut since the Fed slashed 100 bps in March of 2020.

EUR/USD price forecast

Bidders continue to come out of the woodwork to keep bids on balance even if they can’t quite pull out a bullish recovery. EUR/USD popped into a 13-month high just above 1.1200 early last week, and a near-term pullback in Greenback flows sees bids scrambling to hold onto bullish chart paper.

The pair still trades well north of the 200-day Exponential Moving Average (EMA) at 1.0845. Despite holding deep in the bull country, EUR/USD still faces a steepening bearish pullback as shorts congregate targets just above the 50-day EMA at 1.0956.

EUR/USD daily chart

German Factory Orders rose 2.9% in July—a surprising gain which followed an upwardly revised rise of 4.6% for June.

Intraday chart is leaning a bit more EUR-bullish

“It’s a rare piece of good news for the economy which has shown signs of losing momentum recently. Orders data are volatile, however, and broader economic trends, reflected in recent surveys are clearly soft.”

“That is not subduing the EUR right now, however. Short term volatility is firm and demand for EUR bullish structures is reflected in the bounce in 1 week risk reversal pricing (0.3975 vol premium for calls).”

“Similar considerations apply to the EUR’s technical outlook. Limited movement is likely ahead of Friday morning but the picture on the intraday chart is leaning a bit more EUR-bullish. Solid gains yesterday took the EUR above short-term retracement resistance and target additional gains to the 1.1120/40 area. Support is 1.1070.”

The Euro (EUR) was a touch firmer amid broad USD softness overnight, OCBC FX strategists Frances Cheung and Christopher Wong note.

Daily momentum is mild bearish

“Pair was last seen at 1.1098. Daily momentum is mild bearish while RSI was flat. Sideways trade likely with USD the main driver of direction. Support at 1.1026 (recent low), 1.10, 1.0930 (61.8% fibo retracement of 2024 high to low).”

“Resistance at 1.12 (recent high) and 1.1280 (2023 high). This week, focus is on retail sales (Thu) and GDP (Fri). Underwhelming data print could move the needle for markets to price in a more dovish ECB and for the EUR to trade lower.”

• EUR/USD clings to recovery near 1.1100 as weak US Job Openings data pushes the US Dollar on the back foot.
• The major trigger for the US Dollar will be the August US NFP report on Friday.
• The ECB is almost certain to cut interest rates this month.

EUR/USD holds onto Wednesday’s recovery slightly below the round-level resistance of 1.1100 in Thursday’s European session. The major currency pair bounced back sharply on Wednesday after the release of the weaker-than-projected United States (US) JOLTS Job Openings data for July boosted market expectations for the Federal Reserve (Fed) to begin the long-awaited policy-easing cycle aggressively.

A sharp increase in market speculation for the Fed’s large interest rate cut this month weighed heavily on the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, extends its downside to near 101.20. 

The JOLTS Job Openings data showed that job vacancies posted in July were lower at 7.67 million from a downwardly revised 7.91 million in June and below the estimates of 8.1 million. Weak job market data came in as red flags to the labor market. 

For meaningful updates on current labor market conditions, investors await the US Nonfarm Payrolls (NFP) data for August, which will be published on Friday. 

In today’s session, the US Dollar will be influenced by the ADP Employment Change and ISM Services Purchasing Managers Index (PMI) data for August, which will be published at 12:15 GMT and 14:00 GMT, respectively. Economists estimate that payrolls in the private sector rose by 145K from 122K in July. In the same period, activity in the service sector is projected to have expanded at a slower pace, with PMI coming in at 51.1 from the prior reading of 51.4. Upbeat private payrolls and Services PMI data would diminish market speculation for Fed large interest rate cuts, while soft data would strengthen them  

Daily digest market movers: EUR/USD turns sideways after a sharp recovery ahead of US heavy-data day

• EUR/USD trades in a tight range below 1.1100, with investors focusing on a slew of US economic data. In the Eurozone, investors await the Retail Sales data for July that will influence the next move in the Euro (EUR), which will be published at 09:00 GMT. Majorly, the Euro will be guided by the market speculation for the European Central Bank’s (ECB) September monetary policy, in which the central bank is expected to cut its key borrowing rates. 
• Economists estimate the Retail Sales to have grown by 0.1% after contracting 0.3% in June on a monthly as well as annual basis. A slight improvement in sales at retail stores would be insufficient to dampen market speculation that the ECB will resume its policy-easing cycle this month, which started in June, after pausing in July.
• The ECB is widely anticipated to cut interest rates this month as officials have remained worried about poor growth prospects, with confidence that inflationary pressures continue to ease consistently.  ECB Governing Council member François Villeroy de Galhau said in an interview with Bloomberg last week, “There are good reasons for the central bank to consider cutting its key interest rates in September.” Villeroy added, "Unfortunately, our growth remains too weak.” He further added, “The balance of risks still needs to be monitored in Europe."
• Meanwhile, Eurozone growth concerns have deepened further as the final estimate HCOB PMI report showed that the overall economic activity expanded at a slower pace of 51.0 from the flash reading of 51.2. The Composite PMI expanded moderately due to slower growth in the service sector and a continuous contraction in the manufacturing sector.

Technical Analysis: EUR/USD aims to recapture 1.1100

EUR/USD trades sideways near 1.1080 on Thursday after a sharp recovery from a fresh two-week low near 1.1025. The near-term outlook of the major currency pair has improved as it manages to gain firm footing near the 20-day Exponential Moving Average (EMA) around 1.1055. 

The longer-term outlook is also bullish as the 50-day and 200-day EMAs at 1.0970 and 1.0865, respectively, are sloping higher. Also, the shared currency pair holds the Rising Channel breakout on a daily time frame. 

The 14-day Relative Strength Index (RSI) has declined below 60.00 after turning overbought near 75.00.

On the upside, the recent high of 1.1200 and the July 2023 high at 1.1275 will be the next stop for the Euro bulls. Meanwhile, the downside is expected to remain cushioned near the psychological support of 1.1000.

• EUR/USD depreciates as traders adopt caution ahead of key economic figures from the United States.
• Atlanta Fed President Raphael Bostic said that the Fed must not maintain a restrictive policy stance for too long.
• The Euro edges lower amid rising odds of the ECB reducing interest rates in September.

EUR/USD inches lower to near 1.1070 during the Asian session on Thursday. The downside of the EUR/USD pair could be attributed to improved US Dollar (USD) amid rising US Treasury yields.

However, the Greenback weakened following the release of July's US JOLTS Job Openings, which fell short of expectations and indicated a further slowdown in the labor market. The number of job openings dropped to 7.673 million in July, down from 7.910 million in June. This marked the lowest level since January 2021 and was below the market expectation of 8.10 million.

Traders now await US ISM Services PMI and Initial Jobless Claims scheduled to be released on Thursday. Attention will shift to Friday’s US Nonfarm Payrolls (NFP) to gain more cues on the potential size of an expected rate cut by the Federal Reserve (Fed) this month.

Atlanta Federal Reserve President Raphael Bostic said on Wednesday that the Fed is in a favorable position but added that they must not maintain a restrictive policy stance for too long, per Reuters. FXStreet’s FedTracker, which gauges the tone of Fed officials’ speeches on a dovish-to-hawkish scale from 0 to 10 using a custom AI model, rated Bostic’s words as neutral with a score of 4.6.

In the Euro Area, the Producer Price Index rose by 0.8% month-over-month in July, the largest increase since December 2022. This follows an upwardly revised 0.6% rise in June and significantly exceeds market forecasts of 0.3%. However, the Eurozone Services PMI decreased to 52.9 in August, from 53.3 in the previous month. Meanwhile, the Composite PMI dropped to 51.0, missing expectations and falling below the previous reading of 51.2, which was expected to remain unchanged.

The Euro may face challenges amid strong speculation that the European Central Bank (ECB) will cut interest rates in September. This would mark the second interest rate cut by the ECB since it began shifting toward policy normalization in June. Policymakers remain confident that inflation will gradually return to the bank's 2% target by 2025.

• EUR/USD rose on Wednesday as markets sell off Greenback.
• Markets have tilted into a risk-on position as bets of a Fed rate cut rise.
• US jobs data rules the market roost as investors look to NFP.

EUR/USD caught a bid on Wednesday, rebounding from a recent selloff and catching technical support from 1.1050. Despite the topside tilt to price action in the midweek, the pair remains hobbled below the 1.1100 handle. US jobs data will remain the key focus for markets this week in the run-up to Friday’s US Nonfarm Payrolls (NFP).

European Retail Sales remain the sole key data print from the EU side of the Pacific this week. Slated for early Thursday, pan-EU Retail Sales figures in July are expected to recover to a scant 0.1% YoY compared to the previous -0.3% contraction.

US JOLTS Job Openings in July missed the mark, adding 7.673 million available jobs compared to the forecast 8.1 million, compared to the previous month’s revised 7.91 million. With the Federal Reserve (Fed) broadly expected to begin cutting interest rates on September 18, markets are tilting further into bets of a 50 bps cut to kick off the next rate cutting cycle. Rate markets are still pricing in 100 bps in total cuts by the end of 2024, but there’s still a 57% chance of the Fed’s September rate call being a slimmer 25 bps, according to CME’s FedWatch Tool.

Friday's US Nonfarm Payrolls (NFP) report looms large and represents the last round of key US labor data before the Fed’s first rate trim. Friday's NFP print is widely expected to set the tone for market expectations regarding the depth of a Fed rate cut, with investors fully priced in on the start of a new rate-cutting cycle this month.

EUR/USD price forecast

Fiber has slumped back into near-term technical barriers, but bidders continue to come out of the woodwork to keep bids on balance even if they can’t quite pull out a bullish recovery. EUR/USD popped into a 13-month high just above 1.1200 early last week, and a near-term pullback in Greenback flows sees bids scrambling to hold onto bullish chart paper.

The pair still trades well north of the 200-day Exponential Moving Average (EMA) at 1.0845. Despite holding deep in the bull country, EUR/USD still faces a steepening bearish pullback as shorts congregate targets just above the 50-day EMA at 1.0956.

EUR/USD daily chart

The Euro (EUR) is little changed on the session, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

PMI revisions disappoint

“Final Eurozone Services and Composite PMI data were a little worse than the preliminary August read. Spanish and Italian data were mostly better than July data but failed to meet expectations. France’s Composite data were revised slightly higher while German data were revised a little lower.”

“The data had no significant impact on spot trading but sluggish growth momentum in the Eurozone may crimp the EUR’s ability to take fuller advantage of a soft USD once the Fed easing cycle starts. Spot retains a soft technical undertone after peaking around the 1.12 point late last month.”

“But EUR losses are showing signs of flattening out around the mid-1.10 area, which roughly equates to the 1.1040 retracement support point (38.2% of the EUR’s August rally). Short-term price action suggests a minor low may have been reached yesterday on the quick dip under 1.1030. Resistance and minor bull trigger is 1.1100/05.”

The Euro (EUR) traded a touch softer, but range remains subdued, OCBC FX strategists Frances Cheung and Christopher Wong note.

ECB may lower rate again on September 12

“Pair was last seen at 1.1055 levels. Daily momentum is mild bearish while RSI was flat. Support at 1.1026 (recent low), 1.10, 1.0930 (61.8% fibo retracement of 2024 high to low). Resistance at 1.12 (recent high) and 1.1280 (2023 high).”

“Slippage in CPIs out of Euro-area, Germany and Spain and softer mfg PMI print added to expectation that ECB may lower rate again at its upcoming meeting on September 12. Markets have priced in 25bp cut at this meeting and about 36bp cut for remainder of the year (another 1.5 cut).”

“This week, focus is on services PMI, PPI (Wednesday), retail sales (Thursday) and GDP (Friday). Another series of underwhelming data print could move the needle for markets to price in a more dovish ECB and for the EUR to trade lower”.

• EUR/USD finds a temporary cushion near 1.1030 amid a slight correction in the US Dollar.
• The US Dollar falls as the US ISM Manufacturing PMI data signaled a contraction in activity for the fifth month in a row.
• Investors await the US JOLTS Job Openings data for July.

EUR/USD discovers buying interest in Wednesday’s European session after posting a fresh two-week low near 1.1025 on Tuesday. The major currency pair edges higher as the US Dollar (USD) corrects after the release of the United States (US) ISM Manufacturing PMI data for August. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls to near 101.60 after failing to reclaim a two-week high of 102.00.

The ISM Manufacturing PMI, released on Tuesday, came in at 47.2, missing estimates of 47.5 but improving from an eight-month low of 46.8. Despite the slight improvement, markets considered that the overall trend points to a slowdown as a figure below 50.0 suggests a contraction in manufacturing activity.

Amid a data-heavy week, investors keenly await the US Nonfarm Payrolls (NFP) data for August, which will be published on Friday. The official labor market data will shape the Federal Reserve’s (Fed) interest rate cut path for September. Investors seem to be confident that the Fed will start reducing its key borrowing rates this month, but are divided over the size of this potential rate cut. 

The importance of the labor market data has increased significantly after the commentary from Fed Chair Jerome Powell at the Jackson Hole (JH) Symposium, who signalled that the central bank is very much concerned about weakening labor demand.

For more insights on the current labor market status, investors will also focus on the US JOLTS Job Opening data for July and the ADP Employment Change data for August, which will be published at 14:00 GMT and on Thursday, respectively.

The US JOLTS Job Openings report is expected to show that employers posted 8.1 million fresh job vacancies, marginally lower than the 8.184 million a month earlier.

Daily digest market movers: EUR/USD edges higher as US Dollar corrects

• EUR/USD recovers slightly in European trading hours amid a gradual correction in the US Dollar. The Euro’s (EUR) near-term outlook remains downbeat as market participants expect that the European Central Bank’s (ECB) policy-easing cycle could be aggressive given the steep decline in Eurozone inflationary pressures and weak economic growth.
• Economists at Bank of America (BofA) said in their latest report about the Eurozone:  "We still see more cuts in 2025/26 than the markets are pricing, with a return to a deposit rate of 2% by 3Q25 (at the latest) and to 1.5% in 2026." BofA said that Europe's recovery remains fragile and it will likely be shallow, pressured by several economic factors such as slowing growth in China as well as politics.
• ECB officials also remain worried about increasing risks to Eurozone economic growth. ECB Executive board member Piero Cipollone said in an interview with a French newspaper said that there is a real risk that our stance could become too restrictive," adding that, "we must ensure that inflation converges to our target without holding back the economy unnecessarily," Reuters reported.
• On the economic front, investors await the Eurozone Retail Sales data for July, which will be published on Thursday. Economists estimate the Retail Sales to have grown by 0.1% after contracting 0.3% in June on a monthly as well as an annual basis. A slight improvement in sales at retail stores would be insufficient to dampen market speculation that the ECB will resume its policy-easing cycle this month, which it started in June, after pausing in July.
• In today’s session, investors will focus on the Eurozone Producer Price Index (PPI) data for July,w which will be published at 09:00 GMT. The PPI report is expected to show that prices of goods and services at factory gates were deflated at a slower pace of 2.5% from 3.2% in June. A sharp deflation in producer prices indicates a sharp slowdown in the overall demand. This would prompt expectations of ECB rate cuts in September.

Technical Analysis: EUR/USD strives for firm footing near 20-day EMA

EUR/USD recovers slightly after posting a fresh two-week low near 1.1025. The near-term outlook of the major currency pair is uncertain as it struggles to gain firm footing near the 20-day Exponential Moving Average (EMA) around 1.1020. 

The longer-term outlook is still bullish as the 50-day and 200-day EMAs at 1.0964 and 1.0850, respectively, are sloping higher. Also, the shared currency pair holds the Rising Channel breakout on a daily time frame. 

The 14-day Relative Strength Index (RSI) has declined below 60.00 after turning overbought near 75.00.

On the upside, the recent high of 1.1200 and the July 2023 high at 1.1275 will be the next stop for the Euro bulls. Meanwhile, the downside is expected to remain cushioned near the psychological support of 1.1000.

• EUR/USD managed to keep a hold of 1.1050 on Tuesday, but action is tilted downside.
• US PMI figures that flubbed forecasts stoked a fresh bid into the Greenback.
• US NFP labor numbers due this week will be a guiding print for Fed rate cut depth.

EUR/USD tilted further into the low side on Tuesday, with intraday bottom bids testing into two-week lows before settling the day near 1.1050 once again. Price action remains limited as markets gear up for one last US Nonfarm Payrolls (NFP) print this week, but a flop in US ISM Purchasing Managers Index (PMI) figures reignited fears of an impending recession.

Forex Today: The prospects of a US soft landing remain challenged by data

Meaningful European data remains limited in the front half of the trading week, and Thursday will see Fiber traders with their hands full thanks to an update to pan-European Retail Sales in July followed by US preview labor figures before Friday’s NFP jobs dump.

Pan-EU Retail Sales for the year ended in July are expected to recovery slightly, forecast to print at 0.1% YoY compared to the previous period’s -0.3% decline. European Gross Domestic Product (GDP) figures are also slated for Friday, and growth is broadly expected to hold steady at previous figures in the second quarter.

ISM’s US Manufacturing PMI for August came in below expectations, printing at 47.2 and missing the median market forecast of 47.5. Despite a soft rebound from July’s multi-month low of 46.8 failed to galvanize markets, giving already flighty investors a perfect excuse to pull back from a recent lopsided tilt into bullish expectations.

Friday's US Nonfarm Payrolls (NFP) report looms large. It represents the last round of key US labor data before the Federal Reserve (Fed) delivers its latest rate call on September 18. Friday's NFP print is widely expected to set the tone for market expectations regarding the depth of a Fed rate cut, with investors fully priced in on the start of a new rate-cutting cycle this month.

EUR/USD price forecast

Fiber has slumped back into near-term technical barriers, but bidders continue to come out of the woodwork in an effort to keep bids on-balance even if they can’t quite pull out a bullish recovery.. EUR/USD popped into a 13-month high just above 1.1200 early last week, and a near-term pullback in Greenback flows sees bids scrambling to hold onto bullish chart paper.

The pair is still trading well north of the 200-day Exponential Moving Average (EMA) at 1.0845. Despite holding deep in the bull country, EUR/USD is still facing a steepening bearish pullback as shorts congregate targets just above the 50-day EMA at 1.0956.

EUR/USD daily chart

The Euro (EUR) is drifting lower, in line with the broader recovery in the US Dollar (USD), Scotiabank’s Chief FX Strategist Shaun Osborne notes.

Scope for some further, corrective losses in the EUR

“The EUR itself is facing the risk of another rate cut from the ECB soon (25bps is priced in for the September 12th meeting). But a Reuters report yesterday highlighted divisions among ECB policymakers on the outlook thereafter, with some growing more concerned about recession amid weakening activity in Germany, and others more concerned about stubborn inflationary pressures.”

“A more cautious ECB into the end of the year suggests that EUR losses may not extend too far in the short run. EUR/USD has given back a little more than a third of the August rally and looks poised to cede a bit more ground in the short run at least.”

“A low close on the week through last Friday saw a bearish ‘dark cloud cover’ weekly candle signal develop which suggests scope for some further, corrective losses in the EUR. Support is 1.0990 and (stronger) at 1.0920/40. Resistance is 1.1070/75.”

The Euro (EUR) traded little changed overnight. Last seen at 1.1040 levels, OCBC FX strategists Frances Cheung and Christopher Wong note.

EUR/USD to trade below 1.1040

“Daily momentum is mild bearish while RSI fell. Support at 1.1040 (21 DMA), 1.10, 1.0930 (61.8% fibo retracement of 2024 high to low). Resistance at 1.12 (recent high) and 1.1280 (2023 high).”

“Slippage in CPIs out of Euroarea, Germany and Spain and softer mfg PMI print added to expectation that ECB may lower rate again at its upcoming meeting on 12 Sep. Markets have priced in nearly 25bp cut at this meeting and about 37bp cut for remainder of the year (another 1.5 cut).”

“Another series of underwhelming data print could move the needle for markets to price in a more dovish ECB and for the EURO to trade lower. This week, focus is on services PMI, PPI (Wed), retail sales (Thu) and GDP (Fri).”

EUR/USD appreciated by 0.2% to 1.1072, brushing aside the victory of Germany’s far-right Alternative for Germany (AfD) in the eastern state of Thuringia, but now it’s back below 1.1048 at 1.1035, DBS Senior FX Strategist Philip Wee notes.

ECB to join Fed in lowering rates.

“The Euro had depreciated in the last three days of the previous week, dropping to 1.1048 from 1.1184, amid expectations of a second interest rate cut at the European Central Bank meeting on September 12.”

“Following the Eurozone CPI inflation decline to 2.2% YoY in August, down from 2.6% in July, the OIS market has priced in a 94% chance of a 25 bps cut in the deposit facility rate to 3.50%.”

“Last week, ECB Chief Economist Philip Lane cautioned that the mission to return to the 2% target was ‘not yet secure’, signalling concerns with the market pricing in a neutral rate of 2.00-2.50% by mid-2025.”

• EUR/USD drops to near 1.1050 as the US Dollar performs strongly ahead of the ISM US Manufacturing PMI release for August.
• The Fed and the ECB are expected to cut interest rates this month.
• This week, investors will focus on the US NFP data for August.

EUR/USD falls back after failing to extend recovery above the immediate resistance of 1.1080 in Tuesday’s European session. The major currency pair drops as the US Dollar (USD) clings to gains to near an almost two-week high as the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades close to 101.80.

The US Dollar exhibits strength as investors focus on the United States (US) Nonfarm Payrolls (NFP) data for August, which will be published on Friday. Investors will keenly focus on the labor market data to get cues about the likely interest rate cut size by the Federal Reserve (Fed) in the September monetary policy. Market participants remain confident that the US central bank will pivot to policy normalization this month.

According to the CME FedWatch tool, the likelihood of a 50-basis points (bps) interest rate reduction in September is 31%, while the rest favors a 25-bps decline to 5.00%-5.25%. The probability of a large rate cut size has declined from 36% a week earlier, particularly after the revised Q2 Gross Domestic Product (GDP) estimate indicated that the US economy grew at a faster rate of 3% from the preliminary assumption of 2.8%.

In Tuesday’s session, investors will focus on the US S&P Global and ISM Manufacturing Purchasing Managers’ Index (PMI) data for August, which will be published at 13:45 and 14:00 GMT, respectively. The S&P Global PMI, which is a final estimate, is expected at 48.0, similar to the flash estimate. 

Meanwhile, the ISM report is expected to show that activities in the manufacturing sector contracted at a slower pace, with the PMI coming in at 47.5 from the prior release of 46.8.

Daily digest market movers: EUR/USD falls as ECB looks set to cut interest rates again

• EUR/USD drops to near 1.1050 in European trading hours. The major currency pair faces severe pressure as the Euro is on the back foot on firm speculation that the European Central Bank (ECB) will cut interest rates this month. This would be the second interest rate cut by the ECB as it pivoted to policy normalization in June, with policymakers remaining confident that price pressures will return to the bank’s target of 2% in 2025.
• Market speculation for ECB interest rate cuts in September has strengthened as Eurozone price pressures have decelerated significantly and signs of a potential recession in Germany have swelled. Eurozone’s headline inflation declined to 2.2% in August due to a sharp decline in energy prices. 
• The German economy contracted in the second quarter and is expected to go through a rough phase due to weak demand from domestic and overseas markets. 
• Meanwhile, ECB policymakers are also comfortable with market expectations of September rate cuts. Bank of France Governor Francois Villeroy de Galhau said in French magazine Le Point on Friday that “it would be fair and wise to decide in favor of a new rate cut." Villeroy added: "Unfortunately, our growth remains too weak,” and that “the balance of risks still needs to be monitored in Europe,” Reuters reports.

Technical Analysis: EUR/USD seeks support near 20-day EMA

EUR/USD trades inside Monday’s trading range after steading below the crucial resistance of 1.1100. The near-term outlook of the major currency pair is still firm as all short-to-long-term Exponential Moving Averages (EMAs) are sloping higher. 

Earlier, the major currency pair strengthened after breaking above the Rising Channel formation on a daily timeframe. 

The 14-day Relative Strength Index (RSI) has declined below 60.00 after turning overbought near 75.00.

On the upside, a recent high of 1.1200 and the July 2023 high at 1.1275 will be the next stop for the Euro bulls. Meanwhile, the downside is expected to remain cushioned near the psychological support of 1.1000.

• EUR/USD found a foothold near 1.1050 on quiet Monday.
• US markets were dark to kick off trading week, bringing thin volumes.
• Key EU data this week threatens to get overshadowed by US NFP.

EUR/USD found a thin bid on Monday, kicking off the new trading week finding a foothold near 1.1050 as the Fiber tries to hang onto near-term gains. Markets kicked off Monday on a notably thin volume profile, with US markets shuttered for the Labor Day holiday. An extended weekend will see US markets return to the fold on Tuesday just in time to stare down the barrel of a heavy docket full of US labor figures throughout the rest of the week.

EU Retail Sales and Gross Domestic Product (GDP) growth figures are due later in the week, on Thursday and Friday, respectively. However, the big news for the trading week will be a slate of US labor figures, kicking off with Wednesday’s JOLTS Job Openings for July, which is forecast to hold steady at 8.1M MoM.

Thursday’s US ADP Employment Change for August is expected to bounce to 145K from the previous month’s 122K, but the key labor print from the US this week will be Friday’s US Nonfarm Payrolls (NFP) report for August. The US is expected to deliver a healthy print of 165K compared to the previous month’s 114K, and special attention will be paid to the release figures and any historical revisions as this represents the last round of NFP jobs numbers before the Federal Reserve (Fed) gathers on September 18 to deliver a hotly-expected opening volley in a new rate cutting cycle.

EUR/USD price forecast

Fiber managed to eke out an intraday bid on Monday, finding slim gains from the 1.1050 level after paring back for three consecutive trading days. EUR/USD popped into a 13-month high just above 1.1200 early last week, and a near-term pullback in Greenback flows sees bids scrambling to hold onto bullish chart paper.

The pair is still trading well north of the 200-day Exponential Moving Average (EMA) at 1.0845. Despite holding deep in bull country, EUR/USD is still facing a steepening bearish pullback as shorts congregate targets just above the 50-day EMA at 1.0956.

EUR/USD daily chart