Caution prevails ahead of critical US employment numbers

EUR/USD Current Price: 1.1050

• Market sentiment remains sour amid lingering uncertainty over the Fed’s next move.
• The United States will open its employment calendar with JOLTS Job Openings.
• EUR/USD holds steady around 1.1050, short-term risk tilts to the downside.

EUR/USD is trading uneventfully around the 1.1050 level on Wednesday as the gloomy mood persists. Asian and European indexes edged lower following Wall Street’s decline on Tuesday, with U.S. futures currently struggling around weekly lows. The US dollar, however, may not benefit from risk aversion amid growing speculation that the Federal Reserve (Fed) may cut interest rates by 50 basis points (bps) when it meets later this year month.

Ahead of the Fed’s decision, the United States (US) will release employment numbers that could tip the scale toward a timid 25 bps cut or a more aggressive 50 bps. The first relevant report will be released after the American opening, as the country will reveal Job Openings JOLTS in July. The ADP Employment Change report is scheduled for Thursday, while the country will release the Nonfarm Payrolls (NFP) report on Friday.

Meanwhile, the Hamburg Commercial Bank (HCOB) released final services and purchasing managers’ indices (PMIs) for the euro area. Services manufacturing was revised down to 52.9, while the composite PMI was confirmed at 51, below the flash estimate of 51.2. In addition, the EU released its producer price index (PPI) for July, which fell 2.1% from a year earlier. This month, wholesale inflation rose 0.8%, higher than the 0.3% expected by market analysts.

EUR/USD short-term technical outlook

From a technical point of view, the EUR/USD pair risks further downside, although the bearish momentum has subsided. On the daily chart, the pair is developing below a 20 simple moving average (SMA), offering dynamic resistance around 1.1065. Technical indicators, meanwhile, pared losses and stabilized just above the midline, suggesting that short-term buyers are willing to buy ahead of the 1.1000 mark.

At the same time, the 4-hour chart gives indications from neutral to bearish. The 20 SMA is developing below the 100 SMA but has lost its downward slope. It still offers intraday resistance in the 1.1060 price zone. Finally, the Momentum indicator remains directionless around its 100 level, while the Relative Strength Index (RSI) indicator targets a marginal decline around 39, forcing risk to the downside.

Support levels: 1.1020 1.0975 1.0940

Resistance levels: 1.1065 1.1100 1.1145