EUR/USD trades around 1.1800, upside potential appears amid rising odds of Fed rate cuts

EUR/USD remains subdued for the second successive session, trading around 1.1800 during the Asian hours on Thursday. The pair may regain its ground as the US Dollar loses ground amid rising expectations that the Federal Reserve will cut interest rates due to the downbeat ADP national employment report.

EUR/USD Technical Overview

The daily chart for the EUR/USD pair shows it is finally correcting after advancing for nine days in a row. The slide is limited as the dominant trend is bullish, and higher highs are still likely, but not in the near term. The mentioned chart shows technical indicators heading lower, yet with the Relative Strength Index (RSI) indicator still within overbought readings. At the same time, the pair develops far above bullish moving averages, with the 20 Simple Moving Average (SMA) currently at around 1.1570.

In the near term, the EUR/USD pair is battling around a bullish 20 SMA after briefly falling below it. The 4-hour chart also shows the 100 and 200 SMAs heading firmly higher, well below the current level, reflecting buyers’ dominance. Finally, technical indicators turned lower, yet remain above their midlines, limiting the odds for a steeper decline.

Support levels: 1.1745 1.1695 1.1640

Resistance levels: 1.1830 1.1880 1.1910

Fundamental Overview

US ADP Employment Change fell for the first time in more than two years in June. The private-sector payrolls decreased by 33,000 in June after a downwardly revised 29,000 gain in May. This figure came in below the market consensus of 95,000.

Traders await highly anticipated labor market data, including US Nonfarm Payrolls (NFP) and Average Hourly Earnings, due later in the day. Moreover, ISM Services PMI and S&P Global US PMI will also be eyed on Thursday.

Latest remarks from several European Central Bank (ECB) officials on the ECB forum highlighted increasing concern over the Euro's (EUR) strength and its potential dampening effect on inflation.

ECB policymaker Pierre Wunsch said on Wednesday that “I am not uncomfortable with the market's interest rate expectations.” “There is an argument for providing a mildly supportive policy stance,” Wunsch added. Meanwhile, ECB member Olli Rehn said, “ECB should be mindful of the risk that inflation stays persistently below 2% target.” Rehn noted that the “joint European borrowing to finance defence could bolster the Euro's role by creating a new safe asset.”