EURUSD Today Forex - EUR/USD has taken buy offers to consolidate recent decline and move higher from weekly lows around 1.0842 to 1.0850 on Thursday morning in Europe. The Euro and US Dollar currency pair are preparing for key economic data from the Eurozone and the United States.

However, market preparations for economic data such as Eurozone Retail Sales for May, US ADP Employment Change for June, and US ISM Services PMI for June seem to have triggered a corrective bounce in the EUR/USD pair. Additional momentum for recovery could come from weak US economic data and cautious sentiment regarding key upcoming catalysts.

US Factory Orders reported a rebound growth of 0.3% compared to the 0.8% forecast for May. Official data also showed that new orders for durable goods produced in May rose for the third consecutive month.

Earlier this week, the US ISM Manufacturing PMI and S&P Manufacturing PMI weakened, negatively impacting the US Dollar Index.

It is important to note that the hawkish Federal Reserve meeting minutes, along with various comments from European Central Bank (ECB) officials, have been a negative risk factor weighing on EUR/USD prices.

On Wednesday, ECB policymakers and Bundesbank President Joachim Nagel stated that "interest rates need to be raised further," while adding that "it is still too early to say how far." Similarly, German Chancellor Olaf Scholz remarked that "we cannot continuously maintain 0% interest rates" and noted their support for the ECB in fighting inflation, as reported by Reuters.

Alternatively, ECB policymaker Ignazio Visco stated that "interest rate hikes are not the only way to tackle inflation."

It is worth noting that the latest ECB monthly survey on consumer inflation expectations showed that inflation expectations among Eurozone consumers decreased further for the next year in May but remained unchanged for the next three years. Speaking of data, the Eurozone Producer Price Index (PPI) dropped to -1.5% YoY for May compared to the expected -1.3% and the previous reading of 0.9% (revised), while the monthly reading came in at -1.9% for the month compared to the expected -1.8% and the previous reading of -3.2%.

Furthermore, the final reading of the Composite Purchasing Managers Index (PMI) for Eurozone and Germany for June showed a decline to 50.6 and 49.9, respectively, compared to the initial forecast of 50.8 and 50.3. Additionally, the final reading of the Eurozone Services PMI also showed a decline, although still in line with the initial forecast, at 54.1 for Germany but dropping to 52.0 from the initial forecast of 52.4.

On the other hand, a surge in Chinese investors buying wealth products in Hong Kong and Macau, along with uncertainty regarding major Chinese property companies like Shimao Group and Sino-Ocean Group, has heightened economic concerns about China's largest industry players.

Next, the disappointing June Caixin China Services Purchasing Managers' Index (PMI) fell to 53.9 from the previous 57.1, contributing to growing concerns about the US-China trade conflict, while Beijing also imposed new trade restrictions that could affect sentiment and drive the strength of the DXY (US Dollar Index).

According to reports from Global Times China and former Vice Minister of Commerce, US IT companies and players in the metals sector are facing tough challenges. On Wednesday, China announced a sudden control over exports of certain gallium and germanium products, effective from August 1. This latest retaliatory move from China is in response to US restrictions on AI chip shipments to Beijing.

Amidst this, markets are almost pricing in a 0.25% Federal Reserve rate hike in July, which has pushed the US Dollar Index higher, while Wall Street indexes closed in the red, and US Treasury yields rose. It is worth noting that S&P 500 Futures saw a slight decline, while 10-year and 2-year US Treasury yields reached their highest levels in three months.

Looking ahead, the US ISM Services PMI and the June ADP Employment Change report, along with headlines related to China and the challenging recession situation, will be critical in determining a clear direction for the EUR/USD currency pair. Additionally, the potential drop in Eurozone Retail Sales for May also needs to be closely monitored for further clues.

In FxStreet's technical analysis, a daily close below the key support level of 1.0865, now a direct resistance, which consists of the 50-day moving average (DMA-50) and the 38.2% Fibonacci retracement of the January-April price range, favors EUR/USD sellers. However, the convergence of the 100-day moving average (100-DMA) and the two-week downtrend line, which is around 1.0825 at the time of writing, seems difficult for Euro sellers to break through.

Warning!

This analysis is based on a fundamental and technical perspective from trusted sources and does not constitute advice or an invitation. Always remember that this content is intended to enrich the reader's information. Always conduct your own research on other forex information to guide your trading decisions.

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