Euro extends the choppiness around 1.1000 ahead of US ADP

  • Euro trades with small losses near 1.0980 vs. the US Dollar.
  • Stocks in Europe extend the downtrend on Wednesday’s opening.
  • EUR/USD returns to the sub-1.1000 area amidst rising cautiousness.
  • The USD Index (DXY) picks up extra pace above 102.00.
  • Spanish unemployment shrank by 11K individuals in July.
  • The ADP report gathers all the attention on Wednesday.

The Euro (EUR) keeps its erratic performance unchanged so far this week and retreats marginally against the US Dollar (USD), motivating EUR/USD to gyrate around the 1.0980 region following the opening bell in the old continent on Wednesday.

Tracked by the USD Index (DXY), the Greenback manages to maintain the strong recovery in place since mid-July and still looks to consolidate the recent breakout of 102.00 – which was helped by rising US yields and some loss of appeal in the risk-linked galaxy.

During this week, the attention of market participants will be drawn toward crucial economic data releases in both the United States and Europe. These releases are expected to challenge the recently emphasized data-dependency approach that has been adopted by both the Federal Reserve and the European Central Bank (ECB) in their decisions on interest rates.

The absence of relevant data releases in the Euro area should leave all attention to the US calendar, where the publication of the ADP Employment Change is expected to be at the centre of the debate. In addition, MBA will release its weekly report on Mortgage Applications for the week ended July 28.

Daily digest market movers: Euro lacks convincing strength to surpass 1.1000

  • The EUR comes under pressure after briefly testing 1.1000 vs. the USD.
  • The USD Index navigates the area of 3-week tops above 102.00.
  • BoJ’s Uchida left the door open to intervention if yields approach 1%.
  • The US ADP report is expected at around 190K in July.
  • Investors see the Fed on hold for the remainder of the year.
  • Market focus remains on the US labour market this week.

Technical Analysis: Euro’s outlook remains negative below 1.1150

EUR/USD could not sustain an earlier move to the area beyond the psychological 1.1000 hurdle, returning to the 1.0980 zone soon afterwards instead.

If bears push harder, EUR/USD should put the weekly low of 1.0943 (July 28) to the test sooner rather than later ahead of a probable move to the interim 55-day and 100-day SMAs at 1.0913 and 1.0912, respectively. The loss of this region could open the door to a potential visit to the July low of 1.0833 (July 6) ahead of the key 200-day SMA at 1.0733 and the May low of 1.0635 (May 31). South from here emerges the March low of 1.0516 (March 15) before the 2023 low of 1.0481 (January 6).

On the other hand, occasional bullish attempts could motivate the pair to initially dispute the weekly top at 1.1149 (July 27). Above this level the downside pressure could mitigate somewhat and encourage the pair to test the 2023 high at 1.1275 (July 18). Once this level is cleared, there are no resistance levels of significance until the 2022 peak of 1.1495 (February 10), which is closely followed by the round level of 1.1500.

Furthermore, the constructive view of EUR/USD appears unchanged as long as the pair trades above the key 200-day SMA.

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