• The US added 206,000 jobs in June, slightly higher than the forecasted 191,000 jobs.

• Investors raised bets for a Fed cut in September to 76%.

• Renewed political uncertainty in the Eurozone initially weighed on the euro.

The EUR/USD forecast supports bullish sentiment. The dollar was vulnerable after a 1% loss last week on downbeat data. Meanwhile, the euro recovered after dropping due to an unexpected outcome in the last round of French elections.

The dollar fell last week as economic figures revealed a slowdown in the US economy. The primary catalyst was the nonfarm payroll report, which showed weakness in the labor market. The report revealed that the US added 206,000 jobs in June, slightly higher than the forecasted 191,000 jobs. Meanwhile, average hourly earnings eased from 0.4% to 0.3%. The unemployment rate rose from 4.0% to 4.1%, indicating deterioration in the sector.

Consequently, investors raised bets for a Fed cut in September to 76%. This continued economic decline might push Fed policymakers to assume a more dovish stance. However, before that, they might wait to see this week’s inflation figures. More softer-than-expected data will likely pave the way for lower borrowing costs in the US. However, if the figures show persistent price pressures, policymakers might maintain their cautious stance.

Meanwhile, renewed political uncertainty in the Eurozone initially weighed on the euro. The leftist alliance won the election, but there was no majority win. Therefore, this created a hung parliament, making it difficult to pass any policies, especially if the different groups couldn’t work together.

The results were also surprising, as polls had shown that the National Rally would win. However, the party came third.

EUR/USD key events today

It might be a slow day in the market as neither the US nor the Eurozone will release significant economic reports.

EUR/USD technical forecast: Bulls approach strong barrier at 1.0850

On the technical side, the EUR/USD price is approaching the 1.0850 resistance level. Bulls have been in the lead since the price broke above the 1.0750 resistance level. As a result, the price has stayed above the 30-SMA with the RSI near the overbought region.

However, the rally might soon pause if the 1.0850 resistance holds firm. A pause could allow the price to retest the 30-SMA support before it continues higher or breaks below. A break above the 1.0850 resistance would indicate a strong bullish bias.

https://www.forexcrunch.com/blog/2024/07/08/eur-usd-forecast-dollar-carries-on-struggle-after-weekly-slide/