EUR/USD Price Forecast: Looks set to extend advance beyond 1.1600

EUR/USD trades firmly at around 1.1555 amid growing US labor market concerns.
The US private sector created 44K jobs in July, fewer than 70K estimates.
Investors await the Eurozone Retail Sales and the US NFP data.

The Euro (EUR) trades broadly firm at around 1.1555 against the US Dollar (USD) during the Asian trading session on Thursday. The major currency pair reflects strength as the US Dollar is broadly under pressure due to deteriorating United States (US) employment conditions.

At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, holds onto two-day losses at around 99.65.

Análisis de TMGM: noticias de mercados financieros, calendario económico e información del mercado

On Wednesday, the ADP reported the fresh addition of 44K payrolls in the private sector in July, lower than estimates of 70K and the prior release of 98K.

For more cues regarding the US labor market, investors await the Nonfarm Payrolls (NFP) data for July, which will be released on Friday.

According to TD Securities, July’s jobs report is expected to show only a slight improvement after June’s downside surprise. The bank’s economists look for "July NFP [to have] picked up modestly to 70k after surprising to the downside with 57k in June," and judge that "risks to our payrolls forecast appear balanced." They also anticipate that the unemployment rate will show little change, with "the UE rate likely [having] went sideways at 4.2% after declining in June," reinforcing their view of a broadly stable labor market backdrop.

On the Euro front, investors await the Eurozone Retail Sales data for June, which will be published at 09:00 GMT.

EUR/USD technical analysis

EUR/USD holds onto week-long recovery at around 1.1554. The pair strives a decisive break above the downward resistance trend line’s break level at 1.1538, turning it into an immediate pivot and reinforcing a constructive bias while it holds over this reclaimed barrier. Price also stands above the 20-period exponential moving average (EMA) at 1.1472, suggesting dip-buying interest dominates as the Relative Strength Index (RSI) at 64 stays in bullish territory but shy of overbought conditions.

On the downside, initial support is seen at the former trend-line break near 1.1538, with deeper demand expected around the 20-period EMA at 1.1472 if a pullback extends. The pair could return to the July low at 1.1353 if it fails to hold the 20-day EMA.

Looking up, the pair needs to stabilize above the downward-sloping trendline to extend the advance towards 1.1600, followed by the May 29 high at 1.1686.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Economic Indicator

ADP Employment Change

The ADP Employment Change is a gauge of employment in the private sector released by the largest payroll processor in the US, Automatic Data Processing Inc. It measures the change in the number of people privately employed in the US. Generally speaking, a rise in the indicator has positive implications for consumer spending and is stimulative of economic growth. So a high reading is traditionally seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

Traders often consider employment figures from ADP, America’s largest payrolls provider, report as the harbinger of the Bureau of Labor Statistics release on Nonfarm Payrolls (usually published two days later), because of the correlation between the two. The overlaying of both series is quite high, but on individual months, the discrepancy can be substantial. Another reason FX traders follow this report is the same as with the NFP – a persistent vigorous growth in employment figures increases inflationary pressures, and with it, the likelihood that the Fed will raise interest rates. Actual figures beating consensus tend to be USD bullish.

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