EUR/USD starts the week at approximately 1.1540. In the wake of a tumultuous week, market focus has transitioned from the Federal Reserve meeting to the latest US economic indicators. Investors will evaluate whether the forthcoming data strengthens the argument for a September rate increase or, on the other hand, indicates a slowdown in the US economy. Monday presents business activity indices from China and the United States. The US ISM Manufacturing PMI is anticipated to be around 53.0, a decline from the prior figure of 53.3. Maintaining a position above 50 would bolster the dollar, whereas a significant deceleration could cast doubt on economic robustness and lend support to EUR/USD. On Tuesday, focus will shift to JOLTS job openings, with projections indicating a decrease to 7.3 million from 7.594 million.
Wednesday’s highlight is the ISM Services PMI, anticipated to increase to 55 from 54. A robust reading would bolster the dollar, given that services constitute a crucial element of the US economy and serve as a significant driver of inflationary pressure. Thursday’s calendar is relatively subdued, allowing the pair to consolidate in anticipation of Friday’s significant releases. On Friday, Germany is set to publish its foreign trade data, with projections indicating a reduction in the surplus to €11.2 billion from the previous €19.1 billion. The primary focus, however, will be the US labour market report. Non-farm payrolls are projected to increase by 79,000, an improvement from the previous figure of 57,000, while the unemployment rate is anticipated to remain unchanged at 4.2%. A stronger reading would bolster expectations of a Fed rate hike and exert downward pressure on EUR/USD, whereas weak job growth or an uptick in unemployment would lend support to the euro.
On the H4 chart of EUR/USD, the market has established a consolidation range centred around the 1.1533 level, currently fluctuating between 1.1524 and 1.1538. This range is approaching its conclusion. An upside breakout would indicate a corrective move towards 1.1556, succeeded by a decline to 1.1480. A direct downside breakout would pave the way for a movement towards 1.1400. The MACD indicator supports this scenario, with its signal line above zero but pointing downwards, reflecting weakening upward momentum. On the H1 chart, the market has achieved an upward movement to the 1.1556 level. A consolidation range is presently taking shape beneath this level. Today, a decline towards 1.1480 is anticipated, succeeded by an ascent to 1.1518, and then a further downward movement to 1.1400, with potential for the trend to extend to 1.1330. The Stochastic oscillator corroborates this scenario, as its signal line resides below 80 and trends downward towards 20, signifying a rise in short-term downside pressure.
EUR/USD commences a week rich in data, with market participants concentrating on US economic indicators in the wake of the Federal Reserve’s policy decision. The ISM manufacturing and services PMIs, JOLTS job openings, and Friday’s labour market report will play a pivotal role in influencing expectations regarding a possible rate hike in September. A robust collection of data would bolster the dollar, whereas less favourable readings might lend support to the euro. Technically, the pair seems to be consolidating around 1.1533, with a potential corrective move towards 1.1556 before resuming its broader bearish trajectory towards 1.1400 and possibly 1.1330. The week’s data releases will serve as the primary catalysts for determining market direction.