EUR/USD edges lower to near 1.0900 on dismal sentiment, ISM Services PMI in focus
- EUR/USD falls to near 1.0900 on dismal market mood.
- The US Dollar declines as Fed rate cuts in September appears as imminent.
- Middle East tensions grew up as Iran launched missiles on Israel in retaliation to killing of Hamas leader Ismail Haniye.
The EUR/USD pair slips to near the crucial support of 1.0900 in Monday’s European session. The major currency pair faces pressure as market sentiment turns extremely risk-averse due to Middle East tensions and weak United States (US) Nonfarm Payrolls (NFP) report for July, which prompted fears of an economic recession.
S&P 500 futures have faced a bloodbath in Asian trading hours on Monday, exhibiting a sheer decline in investors’ risk-appetite. 10-year US Treasury yields post fresh annual lows near 3.67% as speculation over rate-cut decision from the Federal Reserve (Fed) in the September meeting appears to be a done deal.
Conditions in the Middle East pointing to an all-out war as Iran-backed Hezbollah said it launched dozens of missiles on Israel. The move came in retaliation to the assassination of Hamas leader Ismail Haniyeh by an Israeli airstrike in Tehran.
Meanwhile, the NFP report on Friday showed that labor demand has slowed significantly. Employment numbers came in lower at lower at 114K than estimates of 175K and June’s reading of 179K. The Unemployment Rate jumps to 4.3%, the highest since November 2021, from expectations and the prior release of 4.1%. The report clearly indicates that the labor market struggles to bear the consequences of higher interest rates by the Federal Reserve (Fed).
In Monday’s session, investors will focus on the US ISM Services PMI data for July, which will be published at 14:00 GMT. The report is expected to show that activities in the service sector expanded to 51.0 after contracting to 48.8 in June.
On the Eurozone front, higher preliminary Harmonized Index of Consumer Prices (HICP) for July has raised doubts over European Central Bank (ECB) September rate cuts.