The euro has rebounded from a recent seven-week low, climbing above the $1.15 level in early August trading. Traders are adjusting their positions based on these differing paths.
Expectations for a US interest rate cut grew after the latest jobs report. The U.S. Bureau of Labor Statistics released weaker-than-expected payrolls data for July.
The report also contained sharp downward revisions to the job figures for May and June. This series of weak data points has led many traders to anticipate a Fed rate cut as early as September, with a second cut possible before the end of the year.
Across the Atlantic
The ECB, in comparison, projects a steadier course. The central bank is expected to keep interest rates unchanged in the coming months.
Recent data from Eurostat showed that annual inflation across the Eurozone held at the ECB’s 2.0% target in July, marking the second month at this level.
This cautious stance suggests the bank will wait for more data before altering its policy.
Technical Analysis
On a technical front, the immediate trend for EURUSD is showing a slight downturn of -0.21%. After a strong rally that peaked at 1.15971, the price has been trading in a sideways range, indicating indecision in the market.
From our perspective, the market is currently in a state of indecision. Weak US data is providing a floor for the Euro, while the technicals and some fundamental factors are still pointing to potential weakness.
A break and hold above 1.1600 would be a bullish sign and could signal a move towards higher resistance levels. A break below 1.1500 and then 1.1440 would be a bearish confirmation and could open the door for a test of the 1.13916 low.
