FX.co ★ Hot forecast for EUR/USD on August 2, 2024

Formally, it is reasonable for the dollar to strengthen. After all, the unemployment rate in the eurozone rose from 6.4% to 6.5%. However, the increase was not as substantial as expected since forecasts anticipated a figure of 6.9%. Nonetheless, unemployment still increased. And what's much more important is the Bank of England's decision to lower the base rate, which was also largely expected. Therefore, it was not surprising that the dollar has risen. However, that movement ended even before the eurozone unemployment data was published and a couple of hours before the BoE meeting outcome. This is what's surprising. It indicates excessive speculative pressure, fraught with the growth of imbalances, which are often corrected by sharp and sudden jumps.

Today, given the contents of the United States Department of Labor's report, we should expect the dollar to show a slight weakness. First, this concerns the number of new jobs created outside of agriculture. There are expected to be only 190,000 new jobs, which is the most optimistic forecast. Given the demographic dynamics, it is necessary to create about 250,000 new jobs every month to maintain the stability of the labor market. However, only 532,000 new jobs were created over the last three months. This indicates further growth in unemployment and the inevitability of interest rate cuts, which will undoubtedly put pressure on the U.S. dollar.

The EUR/USD pair extended the current corrective cycle while the market strengthened its positions on the dollar, breaking through the support level at 1.0800.

On the 4-hour chart, the RSI indicator is moving in the lower area of 30/50, indicating that the bearish sentiment persists in the market.

Regarding the Alligator indicator on the same time frame, the moving average lines point downward, consistent with the downward cycle.

Expectations and Perspectives

Based on the euro's local oversold status, the current downward cycle could be interrupted, leading to an attempt to accumulate long positions. However, the main trigger for today will be the information flow, particularly the report from the United States Department of Labor. Thus, technical analysis is relegated to a secondary role.

Complex indicator analysis points to a retracement in the short term. The indicators point to a corrective cycle in the intraday period.