EUR/USD Faces Selling Pressure as US Labor Market Data Awaited

In the Asian session, the EUR/USD pair encountered selling pressure above the key psychological resistance level of 1.1000. Investors turned cautious as they awaited the release of United States labor market data at 12:15 GMT, which had the potential to influence market sentiment.

Adding to the apprehensive mood was the significant loss in S&P500 futures during Tokyo trading, indicating a prevailing cautiousness in the market. US equities were under pressure the previous day after credit rating firm FITCH downgraded the United States economy, prompting concerns among market participants.

Interestingly, despite a decline in US job openings and weak manufacturing PMI data, the US Dollar Index rebounded on Tuesday. The JOLTS job openings data released showed a figure of 9.582 million, slightly lower than the previous release of 9.62 million.

The manufacturing sector’s performance in the US was concerning, as the PMI contracted for the ninth consecutive month, registering a value of 46.4, below the market’s expectations of 46.8. However, Factory Orders fared better, recording a value of 47.3, surpassing the projected figure of 44.0.

Attention now turns to the upcoming US Employment data to be reported by the Automatic Data Processing (ADP) agency on Wednesday. Market consensus anticipates a 188,000 increase in private payrolls, marking the slowest growth in four months following the unexpected surge of 497,000 jobs in June.

On the Eurozone front, inflationary pressures eased in July, declining by 0.1%. However, the region showcased a strong performance in the April-June quarter on GDP parameters, possibly leading the European Central Bank (ECB) to consider raising interest rates further. Investors will keep a close watch on the Retail Sales data later this week, as a robust consumer spending momentum could fuel speculation on more hawkish ECB actions.

As the EUR/USD pair navigates the intricate market landscape, the US labor market data and Eurozone economic indicators are set to play pivotal roles in determining the near-term direction of the major currency pair. Traders and investors remain on high alert as they carefully assess the evolving economic landscape on both sides of the Atlantic.