- EUR/USD has dipped 0.33%, marking its biggest daily decline since December 2024 on Monday.
- US job openings fell short of expectations at 200k, and while consumer confidence has improved, concerns about the job market linger.
- Traders are on edge, awaiting insights from the Fed, EU inflation, as well as employment and growth data to inform their strategies.
The EUR/USD pair has continued its downward trend for a second consecutive day, as market players reflect on weaker-than-anticipated economic data from the US. The dollar’s rise—partly due to the trade deal between the US and the EU—has pressured the euro, which saw a drop exceeding 1.30% on Monday, its most significant loss since December 2024.
Market sentiment has turned a bit sour amidst ongoing US-China trade discussions, although there is a tentative agreement to extend a trade truce initiated by the US president.
On the data front, the June job openings and labor turnover report revealed a slowdown in the labor market, with vacancies missing the 200k mark, as reported by the US Bureau of Labor Statistics (BLS). While consumer confidence ticked up in July, the sentiment surveys indicated challenges in job searching.
Across the pond, economic data appears limited, particularly following the US-EU trade agreements, contributing to the euro’s sluggish performance. Traders are keenly awaiting upcoming figures on German retail sales, as well as growth indicators from Spain, Italy, Germany, and the EU. In addition, the release of HCOB manufacturing PMI data for Spain, Italy, Germany, and the broader Bloc, as well as employment and inflation metrics for Germany and the EU, is highly anticipated.
Meanwhile, all eyes are on the Federal Reserve’s forthcoming policy releases, anticipated to culminate on Wednesday. Analysts expect that the central bank’s decisions will draw considerable scrutiny, especially in light of recent comments from Fed Governors Christopher Waller and Michelle Bowman, indicating support for a 25 basis point rate cut.
Daily Digest Market Mover: Dollar brushes off poor labor data to press down the euro
- The June JOLTS report reflected a drop in job openings to 7.437 million from 7.769 million in May, underscoring a shift in business focus on hiring, influenced by uncertainty around future tariff policies.
- This data emerged just ahead of the Federal Reserve’s policy decisions and the non-farm payroll report due Friday, which is expected to show a decrease in job creation, projecting only 102k new jobs compared to the previous 147k in June.
- The conference committee noted an uptick in consumer confidence for July, with the index rising to 97.2 from June’s 93.0, surpassing the expected 95.0.
- The dollar continued to gain traction, as indicated by the US Dollar Index (DXY), which increased by 0.24% to reach 98.89, representing its performance against six currencies.
- More economic data from the US is on the horizon this week, with the June Core PCE Price Index, employment figures, and ISM Manufacturing PMI expected to shed light on the economy’s current status.
- According to a June survey by the European Central Bank (ECB), households anticipate inflation will range between 2.8% over the next year and for three years, while expecting 2.1% for five years.
- With respect to ECB policy shifts, Deutsche Bank anticipates that the next change will be an interest rate hike, projected for late 2026, and hopes for no early indications of such a move.
- President Trump remarked that the US is considering imposing tariffs globally; he expressed a desire to see China become more open, while estimating that global tariffs range between 15% and 20%.
Technical Outlook: EUR/USD’s downtrend persists below 1.1600
The EUR/USD pair has fallen below its 50-day Simple Moving Average (SMA) of 1.1574 after slipping past the 20-day SMA on Monday, which stands at 1.1678. The relative strength index (RSI) remains bearish, suggesting further downward potential for the currency pair.
If the EUR/USD dips below the 50-day SMA of 1.1550, traders may target 1.1500, with a further drop leading to a target of 1.1400. Conversely, should the pair rise above 1.1600, it could reach the 20-day SMA at 1.1678.
