EUR/USD Outlook: US Macro Data and Labor Reports to Drive Momentum

Fundamental Background and Geopolitical Easing

EUR/USD trades near six-week highs as easing geopolitical tensions and softer macroeconomic data weigh on the greenback. Reports of potential diplomatic negotiations between Washington and Tehran have reduced safe-haven demand for the US dollar, favoring risk-sensitive assets. Concurrently, US Q2 GDP growth slowed to 1.5% year-on-year, while the core PCE price index moderated to 3.3% annually. These releases pushed the US Dollar Index down to a six-week low of 99.57, lifting EUR/USD to 1.1547.

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Market focus now shifts to a series of US economic releases that will shape Federal Reserve monetary policy expectations. The ISM Manufacturing Index is expected to rise slightly to 54.0 in July from 53.3 in June, testing whether manufacturing activity remains in expansion territory above 50.0. The ISM Services report will follow on Wednesday, with forecasts pointing to an uptick to 54.5 from 54.0, serving as a key indicator for overall US economic momentum.

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US Labor Market Preview: JOLTS, ADP, and Nonfarm Payrolls

Labor market updates start with the JOLTS report, where job openings are projected to fall to 7.420 million from 7.590 million. The ADP private payrolls report follows, with consensus estimates predicting 70,000 new jobs. A print below 50,000 would heighten concerns about sustained private-sector labor cooling following June's weak Nonfarm Payrolls (NFP) print of 57,000.

The central event of the week is Friday's Nonfarm Payrolls report for July, projected to show an addition of 88,000 jobs and an unchanged unemployment rate of 4.2%. Market participants will monitor wage growth, forecasted to slow to 3.3% year-on-year from 3.5%, alongside labor force participation trends. A weaker-than-expected release across these labor metrics would likely exacerbate dollar weakness.

EUR/USD Technical Analysis

On the H4 timeframe, EUR/USD exhibits a bullish technical structure, trading between the middle and upper Bollinger Bands and holding above the Ichimoku cloud lines. Although overbought conditions could trigger minor short-term pullbacks, the overall trend remains tilted to the upside. Initial technical resistance lies at 1.1590, aligning with the upper boundary of the daily Kumo cloud, where a sustained breakout would clear the way toward the 1.1600 region.

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