The EUR/USD lost a third of a percentage point on Tuesday as investors huddle in anticipation of Wednesday’s PMI figures from both Europe and the US.

Notably, PMI numbers will open the session in Europe today, with markets expecting a small uptick in Eurozone services PMI numbers to 53.0 in July, after posting 52.8 in June.

In the US, the July services PMI is estimated to decline slightly to 54.4 from 55.3 in June. Global markets believe in a Fed rate cut in September. Investors are closely monitoring all economic indicators in the US as they look for further signs of confirmation on the interest rate front. Traders are currently pricing in a near 100% chance that the Federal Open Market Committee (FOMC) will cut rates by around a quarter point at the September 18th rate call.

As the week moves on, the US quarterly Gross Domestic Product figures will be released on Thursday, and the Personal Consumption Expenditures (PCE) index on Friday. Q2 annual GDP is expected to rise to 1.9% from 1.4%. Friday’s PCE core inflation is expected to fall to around 2.5% year-on-year for June, down from 2.6% last month.

The euro could rebound this week, with the focus on US politics, Eurozone PMIs, and the US Personal Consumption Expenditures (PCE) inflation index. However, some analysts warn that a possible fall in EUR/USD could mean that the price is caught in a classic ‘bull trap,’ signaling further weakness ahead. Key fundamental events to watch out for include Biden’s withdrawal from the November election.

The ‘Trump market,’ generally seen as pro-dollar, could pull back following Biden’s announcement on Sunday. His replacement for the nomination is likely to be Vice President Kamala Harris, who, according to polls, has a better chance of beating Trump. Overall, any positive flow of dollars related to Trump’s presidency could be reversed if his chances of winning were reduced from now on.

Sentiment is currently dominating currency markets, with last week’s global computer outage unsettling markets and inviting investors to buy dollars as a ‘safe haven’ at the expense of the euro. Once the problem is resolved, investor sentiment will improve, supporting the EUR/USD.

EUR/USD Daily Technical Analysis for July 24th:

According to the attached daily chart, bulls continue to look for further encouragement to push EUR/USD closer to the 1.1000 psychological resistance, which over time has been cited as pivotal for further upside momentum. Conversely, the 1.0820 and 1.0765 support levels represent a threat to the current upside momentum. We will also have to see how the bears behave as different data is released today.