• The EURUSD rate remains defensive at its lowest levels in eight days, approaching the consolidation range again
• Upcoming readings of PMI indices in the US and the eurozone, as well as the ECB and Fed’s monetary policy decisions, will be crucial for the further trend on EURUSD
• The US dollar strengthened last week, and recent economic data from the United States were better than expected

The current week is crucial for the EURUSD pair, considering today’s preliminary readings of PMI indices in the US and the eurozone for July. Generally speaking, the estimated PMI data in the eurozone is expected to be weaker than in the US for both industry and services. In addition, investors’ attention will also be focused this week on decisions by the ECB and the Fed, which will take place on Wednesday and Thursday, respectively. Currently, the market assumes the following decisions:

• Fed – the market does not foresee a surprise and with a 99.8% probability, it will raise rates by 25 basis points.
• ECB – at this moment, the market assumes that in the eurozone rates will be raised twice more by 25bp, however, the probability for the second hike of 25 bp is just over 50%.

However, in both cases, the Powell and Lagarde’s comments after the decision will be more significant. In the US, the latest labor market data are still strong, hence despite falling inflation, the tone of the conference may be perceived as neutral/hawkish. While in the EU, weakening data, including PMI, may weigh in favor of a more dovish message.

From a technical point of view, on the daily chart, EURUSD broke out of the consolidation area between 1.053 and 1.106 two weeks ago, and the rate went around 1.126. The breakout, however, was not long-lasting, and last week the price returned to the area of the upper limit at 1.112. The appreciation of the dollar occurred after stronger macro data, including from the labor market in the US. The dollar behaved stronger against most currencies. Key to maintaining the uptrend on EURUSD is defending the support area at 1.106. Otherwise, if the price returns to the consolidation area, EURUSD may retest the level of 1.10 or further 1.08.