EURO LOSES GROUND TO THE DOLLAR
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Euro accelerates its losses vs. the US Dollar midweek.
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Stocks in Europe weaknen further as the session draws to a close
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EUR/USD slips back to the 1.0960 zone as the Dollar advances further.
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The USD Index (DXY) maintains the upbeat mood well past 102.00.
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Spanish unemployment shrank by 11K individuals in July.
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The ADP report surprised to the upside in July.
The Euro (EUR) is coming under increasing selling pressure against the US Dollar (USD), which has driven EUR/USD back to the 1.0950 zone, down for the third consecutive session so far.
The Greenback, tracked by the USD Index (DXY), has managed to maintain its strong recovery since mid-July and is currently navigating multi-week tops in the 102.50 area, where the 100-day and 55-day SMAs also sits. The move higher in the US Dollar also comes in tandem with the continuation of the strong rebound in US yields – especially in the belly and the long end of the curve – as well as the loss of appeal in the risk-linked galaxy.
Moving forward, market participants are expected to remain focused on key economic data releases from both the United States and Europe due later in the week. 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 lack of major data releases from the Euro area leaves all eyes on the US calendar, where the US private sector added 397K jobs in July according to the ADP Employment Change, crushing initial estimates for a 189K jobs gain. Earlier in the session, MBA reported a drop of -3% of Mortgage Applications for the week ended July 28.
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The EUR remains well offered in the mid-1.0900s vs. the USD.
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The USD Index navigates the region of 3-week tops near 102.50.
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BoJ’s Uchida left the door open to intervention if yields approach 1%.
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The US ADP report came at 397K in July.
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The FX universe ignores Fitch downgrade of the US credit rating.
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Investors see the Fed on hold for the remainder of the year.
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Market focus remains on the US labour market this week.
Technical Analysis: Euro risks a deeper decline near term
EUR/USD could not sustain an earlier move to the area beyond the psychological 1.1000 hurdle, returning to the 1.0950 zone afterwards.
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.