EUR/USD Forecast: Pressuring The Upper End Of The Range

Key Points:

• Upbeat macroeconomic data boosted equities and hence, risk-related sentiment.
• Focus shifts to US employment data, as the country will release the Nonfarm Payroll report.
• EUR/USD retains its neutral short-term stance could rally once beyond 1.1310.

It was quite a busy day, with investors having to deal with upbeat data and persistent coronavirus concerns. Upwardly revised June Markit Manufacturing PMIs underpinned the market’s sentiment, later fueled by a positive surprise from the US ISM Manufacturing PMI, which surged 52.5 in June, beating expectations of 49.5. Also, the US reported employment data, with the ADP employment survey showing that the private sector added 2.3 million jobs in June, below the 3 million expected. However, May’s reading was revised from -2.76M to +3.06M. Job cuts in the same month totaled 170,219, down 57% from May’s total of 397,016. Equities rallied, underpinning the high-yielding EUR, which rose to 1.1274 against the greenback.

Meanwhile, the number of new coronavirus cases in the US keeps rising, as the country reports over 40,000 new contagions per day. Businesses are going back into lockdown regardless of governments’ decisions, which may anticipate another setback at the beginning of Q3. Progress is being made with medicines and vaccines, but the world is still not out of the woods.

This Thursday, the focus will be on the US, as the country will publish the Nonfarm Payroll report. The country is expected to have recovered 3 million jobs in the month, while the unemployment rate is seen contracting from 13.3% to 12.3%. Average Hourly Earnings are still seen well above average, although returning to pre-pandemic levels. The yearly figure is seen at 5.3% from 6.7% in the previous month.

EUR/USD short-term technical outlook
The EUR/USD pair continues to trade within familiar levels, near the mentioned daily high, just below the 23.6% retracement of its latest bullish run. The 4-hour chart shows that the 100 SMA is directionless around the mentioned Fibonacci level, reinforcing its strength as resistance. The pair spent the day hovering around a flat 20 SMA, while technical indicators hover around their midlines, reflecting the ongoing neutral stance. At this point, the pair would need to stabilize above the 1.1310 resistance to be able to gain additional bullish traction.

Support levels: 1.1210 1.1170 1.1125

Resistance levels: 1.1270 1.1310 1.1350