Buyers hesitate despite warm US employment numbers

EUR/USD Current Price: 1.1094

• Mixed European macroeconomic figures failed to boost the euro.
• Warm US employment data puts the US dollar under selling pressure.
• EUR/USD struggles to extend gains beyond 1.1100, limited upside momentum.

EUR/USD regained the 1.1100 level during European trading hours, but struggled to extend gains beyond the level ahead of the United States (US) employment figures. The pair peaked at 1.1118 after data came in worse than expected as the ADP report showed the private sector added 99,000 new jobs in August, well below the 145,000 expected.

At the same time, the Challenger Job Cuts report showed that layoffs in August rose to 75,891, the highest monthly figure in fifteen years, while year-to-date hiring hit an all-time low. Finally, initial jobless claims for the week ended Aug. 30 came in at 227,000, below the 230,000 expected and the previous 232,000.

The figures further bolstered the case for a Federal Reserve (Fed) interest rate cut next meeting as they confirm the labor market has cooled enough to ease monetary policy.

European data released earlier in the day was mixed as German factory orders rose 2.9% in July, better than the -1.5% expected. On an annual basis, orders increased by 3.7%, after -11.2% recorded in June. However, the eurozone reported that retail sales rose just 0.1% month-on-month in July, and they also fell 0.1% from a year earlier.

Data will remain under the spotlight as the US will release August’s ISM purchasing managers’ index (PMI) after Wall Street opens. The index is expected at 51.1, below the 51.4 posted in July.

EUR/USD short-term technical outlook

The EUR/USD pair is currently trading around 1.1090 and the daily chart shows that it is holding on to modest intraday gains. However, bullish potential appears limited as technical indicators are neutral to bearish within positive levels. At the same time, the 20 Simple Moving Average (SMA) has regained its bullish position just below the current level, providing near-term support around 1.1070. Finally, the 100 and 200 SMAs are converging around 1.0850 with modest upward slopes.

In the short term, and according to the 4-hour chart, the pair is neutral to bullish. EUR/USD is currently developing above all of its moving averages, with a modestly optimistic 100 SMA acting as near-term support. Technical indicators, however, have lost their upside and turned lower, although they are still holding positive levels, limiting bearish scope.

Support levels: 1.1065 1.1020 1.0975

Resistance levels: 1.1115 1.1150 1.1185