Important events today:

06.07 14:00 UTC: USD – ISM Services PMI.

June data for the Eurozone provides a mixed but steady backdrop for the Euro. The services business activity index rose to 49.4 points from 47.7 in May, while the composite indicator returned to growth. Inflation slowed to 2.8%, but the ECB raised key rates in June and maintains room for a cautious policy stance. The improvement in business activity supports the single currency, although the weakness in the services sector has not been fully resolved.

The Dollar came under pressure following the June US labor market report. Payroll growth was weaker than expected, and previous months were revised downward, thereby lowering the probability of a Fed rate hike by September. The market reduced demand for the US currency ahead of the June meeting minutes. For EURUSD, the revision of relative expectations is crucial, as the dollar’s advantage was previously built on the likelihood of further tightening in US policy.

The slowdown in European inflation limits the Euro’s potential. However, less certain expectations regarding the Fed, the ECB’s rate hike in June, and an improvement in composite business activity create a favorable fundamental balance for the pair. As long as new US data does not contradict the assessment of a cooling labor market, the priority remains with the strengthening of EURUSD.

Recommendations: BUY 1.1435, SL 1.1405, TP 1.1525.