Euro flatlines above 1.1500 as traders turn cautious ahead of US NFP data

The EUR/USD exchange rate remains stable around 1.1505 at the start of European trading on Tuesday, with market participants exercising caution in anticipation of the highly anticipated US Nonfarm Payrolls (NFP) data for July. Eurozone inflation increased marginally in July, reaching 2.9% year-over-year (YoY) from 2.8% in June, as reported by Eurostat.

Core Eurozone inflation accelerated to 2.5% YoY in July, surpassing the consensus forecast of 2.4%. Financial markets are optimistic about multiple European Central Bank (ECB) rate hikes, with expectations aligned by October and April, according to Reuters. The upcoming US employment figures, scheduled for Friday, will provide insights into the US labor market and potential interest rate trajectory.

Economists anticipate a rise of 83,000 jobs in July, with the unemployment rate projected at 4.3%. Should the data surpass expectations, the US Dollar could experience short-term gains. Markets have calculated a 64.7% probability of a US rate hike in September, down from approximately 77% prior to the July Fed meeting, as indicated by the CME FedWatch tool.

ING strategists emphasize that the trajectory of EUR/USD in the forthcoming weeks will be profoundly influenced by the Federal Reserve's decision in September, considering it as the most significant variable. The pair's potential ascent towards the 1.1615/20 resistance level or a descent below the 1.1500 support level will hinge on the Federal Reserve's stance, as highlighted by ING.

The EUR/USD price chart exhibits a bearish outlook in the short term, as the current price remains under the 100-day Simple Moving Average (SMA). The currency pair is confined within a tightening volatility range, with price hovering above the 20-day Bollinger SMA but near the upper Bollinger band, which suggests limited upside potential.

The Relative Strength Index (14) stands at 58.9, indicating weakening bullish momentum rather than a clear trend reversal. On the upside, the primary resistance level is near 1.1535, just above the 100-day SMA barrier at 1.1570, which continues to establish the broader ceiling for EUR/USD. Conversely, initial support is anticipated around the current price level of 1.1510, followed by the mid-Bollinger band support at 1.1435, with further downside exposure to the lower Bollinger band support near 1.1335.