The euro remains constrained as investors anticipate critical data.
- The July retail sales indicate a significant drop in consumption, more than market expectations.
- Later today, the US ADP employment report may provide some hope regarding potential Federal Reserve easing.
The EUR/USD pair has experienced losses, hovering around 1.1650 in Thursday’s European session. This position follows disappointing retail sales figures, nearly touching the lower limit of its recent trading range, with investors keenly awaiting the upcoming ADP employment changes from the US.
Recent data from Eurostat revealed that retail consumption in the Eurozone fell by 0.5% in July, which was significantly more than the anticipated 0.2% decline. Interestingly, the June figure was updated to a 0.6% increase from an earlier reported 0.3% rise. On a year-over-year basis, retail sales rose by 2.2%, falling short of the expected 2.4% and down from a previous month’s growth of 3.5%.
On Wednesday, disappointing US job additions raised concerns about the labor market, igniting speculation about possible immediate interest rate cuts from the Federal Reserve. This viewpoint was supported by Fed officials, including Gov. Christopher Waller and Atlanta Fed President Rafael Bostic.
Investor belief in easing by the Fed during the upcoming September meetings surged from about 87% to 97%, alleviating fears surrounding soaring fiscal debt in major economies that had unsettled the market earlier in the week. US 30-year bond yields have dipped below 4.90%, down from Wednesday’s peak of nearly 5%, while long-term yields in Germany eased to 3.35%, following a multi-year high of 3.43%.
Despite this, market sentiment remains cautious. The spotlight today is on the US ADP Employment Report, which is projected to show a decrease in job additions compared to the non-farm payroll figures. It’s possible we might see a confirmation of a 25 basis point cut following the FOMC meeting on September 17th.
Daily Digest Market Movers: Investors Hesitant Before US Employment Data
- While the fear surrounding debt has subsided, making it somewhat encouraging for the Euro, traders are cautious about potential positive surprises in the non-farm payroll report, which could undermine expectations for rate cuts in September. This suggests that the euro might continue to oscillate within its previous range.
- Job openings in the US for July dropped to 7.181 million, the lowest in nearly a year, falling short of a predicted 7.4 million. Additionally, the previous June reading was revised down to 7.357 million from 7.437 million.
- On the same day, Fed Gov. Christopher Waller mentioned in a CNBC interview that interest rate cuts could start in September and suggested “we might see multiple cuts” in the next six months.
- Similarly, Atlanta Fed President Bostic stated it would be appropriate to lower rates in 2025, though he pointed out ongoing inflation concerns for central banks.
- On Wednesday, a candidate recommended by US President Trump committed to upholding the independence of the Federal Reserve during a Senate Banking Committee hearing.
- Today’s economic calendar features changes in employment from Automatic Data Processing (ADP), set to release at 12:15 GMT, with August’s figures expected to reflect a rise of 65K in private payrolls, down from 104K in July. These lower numbers could intensify worries about a weakening labor market ahead of Friday’s important non-farm payroll report.
- Later, the ISM Services PMI is anticipated to reflect some uptick in sector activity, improving to 51.0 from July’s 50.1.
Technical Analysis: EUR/USD Staying vulnerable, with focus on the 1.1585 support area for bears.
The EUR/USD appears to be juggling bearish pressures experienced earlier in the week, but it’s still not entirely clear of those risks. Investor sentiment remains cautious, aggravated by long-term yields at historic highs and uncertainties in French politics. Current technical indicators don’t indicate a strong bias either way, yet the bottom of the trading range around the 1.1585 mark has remained relatively tight for the past month.
Immediate support zones reflect bearish activity around August 11th, 22nd, and 27th, leading towards a main support area between 1.1575 and 1.1590, with lows near 1.1610 experienced on Wednesday. Additionally, the 50% Fibonacci retracement level, located at 1.1565, may provide some backing before approaching lows around 1.1530 seen on August 5th.
On the flip side, the 1.1682 high noted on Wednesday will be an initial challenge for the bulls, beyond which is the downward trend line resistance around 1.1725 and 1.1735, which has previously encountered bullish activity on August 13th, 22nd, and September 1st.
Economic indicators
Retail Sales (Mom)
Retail sales statistics are crucial as they reflect the performance of the retail sector in the Eurozone each month, representing around 5% of the overall value added to the economy. The adjustments in retail sales influence investor sentiment heavily; a positive reading is generally bullish for the Euro, while a negative reading is bearish.
Last Release: Thu Sep 04, 2025 09:00
Frequency: monthly
Actual: -0.5%
Consensus: -0.2%
Previous: 0.3%
Retail Sales (Yoy)
Year-on-year retail sales figures are similarly significant, as they outline the yearly changes in the sector and are also heavily scrutinized for consumer spending behavior. As with monthly sales data, a high reading is typically bullish, while a lower reading raises bearish sentiment.
Last Release: Thu Sep 04, 2025 09:00
Frequency: monthly
Actual: 2.2%
Consensus: 2.4%
Previous: 3.1%
