Jakarta, GIC Trade – EUR/USD is under selling pressure amid expectations for further Fed rate hikes, which provide some support for the dollar. Meanwhile, expectations that the ECB will soon end its rate hike cycle contribute to the euro's decline.
 
The EUR/USD pair received some supply on the first day of the new week and pulled back further from a four-day peak around the 1.1040 area, touched in reaction to somewhat disappointing U.S. NFP reports on Friday.
 
Details from the closely watched U.S. monthly employment report showed that the economy added 187,000 jobs in July, alongside downward revisions for May and June, indicating a slowdown in labor demand.
 
Nevertheless, solid wage growth and an unexpected drop in the unemployment rate suggest continued tightening in the labor market. This keeps the door wide open for another 25 bps rate hike by the Federal Reserve (Fed) in September or November, providing some support for the dollar.
 
The shared currency is undermined by expectations that the European Central Bank (ECB) will halt its streak of nine consecutive rate hikes in September amid signs that underlying inflation in the Eurozone has peaked.
 
On the other hand, the euro's weakness also follows the release of data showing that industrial production in Germany fell more than expected in June. Germany's annual industrial production declined by 1.7% in June compared to the 0% figure seen in May.
 
Fundamentally, expectations that ECB interest rates will soon end put pressure on the euro currency. Meanwhile, the release of German industrial production data falling more than forecast also contributed to the pressure. So, how does it look technically? Here’s the analysis:
 
Technical Analysis



EUR/USD on the 1-hour period is trying to move lower, touching the support level at 1.09820 again and heading toward the next support level at 1.09240. The downtrend is also evident from the FXBot template, where the EUR figure is lower at 3.4 compared to the USD figure of 4.8. Meanwhile, the bearish bias is supported by the sell signal indicated by the red arrow.
 
This Forex trading analysis is based on both fundamental and technical views used by the author and does not constitute advice or solicitation. For more information, click the image below.