Daily Technical Analysis EUR/USD: drops to around 1.1550 despite the moderate stance on the Fed’s policy prospects

The EUR/USD pair retreats on Monday, trading around 1.1560 after advancing nearly 1.5% in the previous session. The decline comes as the US Dollar (USD) rebounds from its prior losses, partially regaining investor confidence.

However, the greenback may face renewed pressure following Friday’s disappointing US jobs report, which prompted a notable shift in market expectations for Federal Reserve policy. Traders are now pricing in approximately 63 basis points of rate cuts by year-end—up from around 34 bps a day earlier—with the first move anticipated in September.

July’s Nonfarm Payrolls (NFP) rose by just 73,000, significantly below the forecast of 110,000 and down from a revised 14,000 increase in June (originally reported as 147,000). Meanwhile, the unemployment rate ticked up to 4.2%, in line with expectations.

Despite the pullback, downside in EUR/USD may be limited as the Euro (EUR) remains supported by expectations that the European Central Bank (ECB) will delay rate cuts due to persistent inflation. Eurozone CPI held steady at 2.0% in July, slightly above the 1.9% forecast, suggesting inflation remains above the ECB’s near-term projections. Additionally, newly imposed US tariffs—including a 15% duty on EU exports—have added further complexity to the outlook.

EUR/USD Daily Technical Analysis – August 4

EUR/USD rebounded from the bullish 100-day Simple Moving Average (SMA) but remains capped below the bearish 20-day SMA, which currently offers dynamic resistance near 1.1640. Technical indicators are recovering from oversold levels, maintaining upward slopes though still within negative territory.

A sustained move above 1.1640 could open the door for a test of the 1.1700 level, with further gains potentially targeting the yearly high at 1.1830. On the downside, key support lies at 1.1470, with a break below this level exposing the recent low near 1.1390.