Daily Analysis EURUSD - 4 July 2023

The EUR/USD experienced a recovery following the release of disappointing US data, allowing it to climb back above 1.0900 during the American session. Due to US holidays, the markets are expected to remain relatively calm on Monday. However, the Greenback is losing its momentum, and the upcoming employment data and release of the FOMC minutes will play a crucial role.

On Monday, economic data revealed a downward revision to the Eurozone's June Manufacturing PMI, with the headline figure dropping from the initial 43.6 to 43.4. The Service sector data is scheduled to be released on Wednesday. Despite these weak figures, the European Central Bank (ECB) plans to raise interest rates during the next meeting on July 22, with the odds of another hike in September being above 50% due to elevated inflation.

A weaker US dollar on Monday contributed to the rebound of the EUR/USD from 1.0870 to 1.0935, prompted by below-expectation data from the US. The ISM Manufacturing PMI decreased from 46.9 to 46, falling short of the anticipated modest increase to 47.2. Additionally, the Prices Paid Index dropped from 44.2 to 41.8, while the Employment Index declined from 51.4 to 48.1.

Hawkish comments from the Federal Reserve have provided support to the Dollar. The Fed will release the minutes of its latest meeting on Wednesday, and key labor market data, including ADP, Jobless Claims, JOLTS, and Nonfarm Payrolls, is expected on Thursday and Friday. Weak data in these reports could diminish expectations of a Fed rate hike. In the short term.

After testing breaking the descending trendline the EUR/USD is potentially forming a descending triangle pattern, suggesting further downward movement for the pair. Meanwhile, the DXY (US Dollar Index) is also forming a third leg higher, indicating a potential breakout above the key resistance level at 103.40.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.1080	1.1050	1.1000	1.0950	1.0912	1.0860