EURUSD falls below key technical levels with US NFP in the barrel

• EUR/USD slipped back below 1.0800 as bearish pullback gains strength.
• Mixed US data reignited fears over a possible recession in the US.
• US NFP jobs report in the pipe for Friday, market attention fixed squarely on hiring numbers.

EUR/USD lost a foothold above key technical levels on Thursday, slumping below the 1.0800 handle after a miss in US Purchasing Managers Index (PMI) figures sparked fresh fears of worsening economic data signaling the possibility of a hard landing scenario in the US economy.

Forex today: Markets’ attention shifts to US NFP

European economic data remains thin for what’s left of the trading week, and next week sees little of note on the meaningful release side for the EU as broader markets pivot to fully face down Friday’s US Nonfarm Payrolls (NFP) jobs report for July. Investors hope for a moderate drop to 175K new US jobs in July from 206K last month. Too high of a print could splash cold water on rate cut hopes for September, while too low of a figure would add further weight to concerns of a too-fast economic decline dragging the US economy into a recession.

Markets are struggling to balance on the edge of a very sharp knife as a downturn in economic figures is helping to pin rate cut expectations even further into the ceiling. According to the CME’s FedWatch Tool, rate traders are pricing in 100% odds of at least a quarter-point rate cut from the Fed on September 18, with further one-in-five odds of a double-cut for 50 basis points. On the downside, too much of a downturn will obliterate market sentiment as a hard landing economic scenario for the US economy makes any rate cuts from the Fed irrelevant, and investors are strung along a difficult middle ground where they hope for rate cuts on soft data, but not so soft that the US economy rolls over.

US Initial Jobless Claims for the week ended July 26 rose to 249K from the previous week’s 235K, lurching past the forecast uptick to 236K. July’s US ISM Manufacturing Purchasing Managers Index (PMI) tumbled to an eight-month low of 46.8 compared to the previous 48.5 and entirely reversing the forecast move up to 48.8.

On the other side of the same coin, ISM Manufacturing Prices Paid in July accelerated to 52.9 versus the previous 52.1 and entirely missing a forecast easing to 48.8 as input prices for manufacturers drift higher than markets anticipated even as activity declines.

EUR/USD technical outlook

The Fiber’s downside performance sent the pair tumbling below the 200-day Exponential Moving Average (EMA) at 1.0805, and dragged bids back under the 1.0800 handle as a bearish turnaround in EUR/USD grows its legs, sinking the Euro into a -1.56% decline against the Greenback.

EUR/USD set a near-term high of 1.0948 in recent weeks, falling just short of the 1.0950 level and price action has once again slumped within the range of a choppy descending channel that has plagued the chart since late last year.

EUR/USD daily chart