On August 1, the Bank of England (BOE) held its interest rates steady at 5.00%, but the Monetary Policy Committee votes revealed a split, with some members favouring a hike to 5.25%.
This cautious stance, combined with BOE Governor Bailey’s remarks, suggests uncertainty in the UK economy, impacting GBP/USD. The pair has faced pressure as traders digest this indecision.
In the US, unemployment claims rose to 249K, higher than expected, adding to concerns about labor market softness. The ISM Manufacturing PMI fell to 46.8, missing forecasts and highlighting slowing economic momentum. These factors have kept the Dollar Index hovering around $104.30, reflecting mixed market sentiment.
Looking ahead to August 2, the focus will shift to US labor market data. Average Hourly Earnings are expected to increase by 0.3%, aligning with the previous month’s growth.
However, Non-Farm Employment Change is projected to slow to 176K from 206K, while the unemployment rate is forecast to hold steady at 4.1%. These data points could significantly influence the EUR/USD and Dollar Index.
If the figures disappoint, the Dollar Index may face downward pressure, offering a potential lift to EUR/USD.
Immediate support is at $103.978, with additional levels at $103.689 and $103.460. The 50-day EMA stands at $104.352, slightly below the 200-day EMA at $104.652, suggesting short-term bearish momentum.
The outlook remains bearish below $104.429, but a break above this level could trigger a more bullish trend. Traders should monitor these levels closely.
The EUR/USD pair is trading at $1.07958, up 0.05%, amid fluctuating market sentiment. The 4-hour chart highlights a pivotal resistance level at $1.08155. A break above this could signal bullish momentum, targeting resistance at $1.08484 and $1.08706.
However, if the price fails to break through, the pair may test support at $1.07773, with further levels at $1.07466 and $1.07201.
The 50-day EMA is at $1.08303, slightly above the 200-day EMA at $1.08257, indicating a potential bearish trend.
Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.