EUR/USD clings to gains near 1.1100 on weak US JOLTS jobs

• EUR/USD clings to a recovery near 1.1100 as weak US jobs data puts 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 is keeping Wednesday’s recovery slightly below resistance at the 1.1100 round level in Thursday’s European session. The major currency pair rebounded sharply on Wednesday after the release of weaker-than-forecast United States (US) JOLTS Job Openings data for July boosted market expectations that the Federal Reserve (Fed) will begin its long-awaited policy easing cycle. aggressive.

A sharp increase in market speculation for a big interest rate cut by the Fed this month has hit the US dollar (USD) hard. The US Dollar Index (DXY), which tracks the greenback against six major currencies, is extending its decline to near 101.20.

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

For significant updates on current labor market conditions, investors await US non-farm payrolls (NFP) data for August due out 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 released at 12:15 GMT and 14:00 GMT respectively. Economists estimate that private sector payrolls rose by 145,000 from 122,000 in July. During the same period, activity in the services sector is expected to expand at a slower pace, with the PMI coming in at 51.1 from the previous reading of 51.4. Upbeat data on private payrolls and services PMI would dampen market speculation for big Fed rate cuts, while weak data would strengthen them

Daily market reasons: EUR/USD turns sideways after sharp recovery ahead of heavy US data day

• EUR/USD is trading in a tight range below 1.1100 as investors focus on a slew of US economic data. In the Eurozone, investors await the July retail sales data, which will influence the next move of the Euro (EUR), which will be released at 09:00 GMT. Mainly, the euro will be guided by market speculation for the September monetary policy of the European Central Bank (ECB), where the central bank is expected to cut its key lending rates.
• Economists forecast retail sales rose 0.1 percent, after contracting 0.3 percent in June, both monthly and annually. A slight improvement in retail sales would be insufficient to ease market speculation that the ECB will resume its policy easing cycle this month, which began in June after a pause in July.
• The ECB is expected to cut interest rates this month as officials remained concerned about the weak growth outlook, with confidence that inflationary pressures continue to ease steadily. 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 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 deepened as the final HCOB PMI estimate showed global economic activity expanded at a slower pace of 51.0 compared to a brisk reading of 51.2. The composite PMI expanded moderately due to slower growth in the services sector and a continued contraction in the manufacturing sector.

Technical analysis: EUR/USD aims to recover 1.1100

EUR/USD is trading sideways near 1.1080 on Thursday after a sharp recovery from a fresh two-week low near 1.1025. The major currency pair’s short-term outlook has improved as it manages to gain a firm position 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 on the higher slope. The shared currency pair also holds the breakout of the Rising Channel on a daily time frame.

The 14-day Relative Strength Index (RSI) dipped 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 Euro bulls. Meanwhile, the downside is expected to remain cushioned near the psychological support of 1.1000.