EUR/USD Sees Modest Gains, Awaits US Data for Further Direction

EUR/USD Sees Modest Gains, Awaits US Data for Further Direction

The EUR/USD currency pair managed to secure slight gains on Monday and reached a daily peak of 1.0840 during Tuesday's Asian trading session. However, as the European trading hours progressed, the pair encountered challenges in sustaining its bullish momentum, with investors eagerly anticipating crucial data releases from the US.

The recent improvement in market sentiment, combined with declining yields on US Treasury bonds, contributed to a weakening of the US Dollar against its primary counterparts during the American trading session on Monday.

Supporting the Euro's position, certain hawkish comments emerged from officials of the European Central Bank (ECB). ECB policymaker Robert Holzmann suggested the possibility of another rate hike in key rates, emphasizing that a review of policy might be undertaken once the deposit facility rate hits the 4% mark. In a separate context, Bundesbank Chief Joachim Nagel refrained from disclosing explicit signals, indicating that decisions would unfold in due course.

Later in the day, the focus will be on the release of July's JOLTS Job Openings data from the US. Market participants are closely monitoring this data, with projections indicating a potential decline in job openings from 9.58 million in June to 9.46 million. Should this figure hover around or dip below 9 million, the US Dollar could experience renewed bearish pressure. Conversely, an unforeseen increase could trigger an initial positive response for the currency while possibly weighing on the EUR/USD pair.

Investors are also keeping a keen eye on developments in major US equity indices. During the European session, US stock index futures exhibited minimal movement, leaving the overall risk sentiment ambiguous. The trajectory of Wall Street's risk rally might have implications for the US Dollar, potentially exerting downward pressure if the rally continues.

Our preference

Short positions below 1.0860 with targets at 1.0780 & 1.0765 in extension.