EUR/USD Daily Forecast – Euro Retakes 1.1800 as Dollar Slumps

Published: Aug 5, 2020, 10:10 UTC•2min read

A recovery in the dollar was short-lived and EUR/USD is seen once again regaining upward momentum.

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The US Dollar attempted to recover higher after reaching a fresh two-year low on Friday but the bounce failed to gain momentum and the greenback is once again under pressure against all of its major counterparts.

PMI figures released from the euro zone today confirmed strength in the economic recovery. The index for the services sector printed at 54.7 which marks the fastest pace of growth in two years.

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The data points towards a strong rebound in the third quarter after a sharp contraction in the second. The emphasis now is whether the euro zone can maintain this momentum, which will be heavily weighted by their ability to contain the virus.

Later in the North American session, the US will release it’s latest non-manufacturing PMI figures. Analysts expect the numbers to match the reading from June. The latest services PMI will also be released, the estimate is for the index to hit 49.6, falling just short of 50, the figure that signals growth.

Aside from PMI figures, the ADP will release their latest job data from June. The ADP report is a precursor to the widely watched Non-farm payroll report that will be released on Friday. Analysts expect the report will show a jobs gain of 1.2 million after a gain of 2.4 million in May.

Technical Analysis

EURUSD 4-Hour Chart

After finding buyers at the 1.1700 handle, EUR/USD shows a renewal of upward momentum.

Near-term support for the pair is seen at 1.1735. This level served to hold the pair lower over the summer of 2018, on a weekly chart.

Last week, the 1.1900 price point proved to be a major hurdle. The same level is seen as resistance in the session ahead. If the currency pair is able to break above it, it might pave the way for a test of the psychological 1.2000 handle.

Bottom Line

The US Dollar index (DXY) is once again under pressure after a brief recovery attempt on Friday and Monday.
PMI figures show the services sector in the eurozone growing at the fastest pace in two years.
Jobs data will be released from the US later today while the widely watched NFP report will be released on Friday.

For a look at all of today’s economic events, check out our economic calendar.

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