• The EUR/USD currency pair has maintained stability around and above the 1.09 level, following its climb to a seven-month high of 1.1008 dollars.
• Concurrently, traders continue to assess monetary and economic forecasts.
• Weak US economic data has raised concerns about a significant slowdown or potential recession in the world's largest economy, increasing bets that the Federal Reserve will need to cut US interest rates more aggressively.

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Also, traders in Europe have increased their expectations for rate cuts by the European Central Bank, now expecting an additional 90 basis points cut this year, with a further 50 basis points likely at the September meeting. On the economic data front, German factory orders unexpectedly rose 3.9% in July, offering a glimmer of hope for a recovery in the struggling manufacturing sector.

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On the stock trading front, European stocks closed a volatile session with mixed performance. According to trading, the major European bourses closed with mixed performance, with the Stoxx 50 index down 0.1% and the Stoxx 600 index up 0.2% after a brief recovery in morning trading, as concerns over the economic outlook persisted.

On the data front, factory orders in Germany unexpectedly rose 3.9%, beating market expectations for a 0.8% increase, sparking optimism about the struggling manufacturing industry. On the other hand, retail sales in the euro zone fell more than expected. Financial stocks led the losses, with BNP Paribas, UniCredit, Instesa Sanpaolo and Deutsche Börse falling more than 1.3%. Bayer shares also fell about 6% after reporting a sharp decline in quarterly profit for the three months ended in June. In the meantime, ASML shares added nearly 6% to enjoy some relief from the recent sell-off, while Airbus and Saab shares advanced more than 2%.

On another front, the yield on 10-year German bonds rose to 2.2% after touching a six-month low of 2.16% earlier in the month, as traders continue to assess monetary and economic forecasts. Weak US economic data has raised concerns about a significant slowdown or potential recession in the world's largest economy, raising bets that the Federal Reserve will need to cut interest rates more aggressively. Also, European traders have increased their expectations for interest rate cuts by the European Central Bank, now anticipating an additional 90 basis point cut this year, with a possible 50 basis point cut at the September meeting.

On the economic calendar front, Eurozone construction PMI points to another significant contraction. The HCOB Eurozone Construction PMI fell to 41.4 in July, its lowest level in six months, from 41.8 in June. The reading showed that the construction sector remained firmly in contraction territory as activity fell markedly again, with output falling by the most in six months, driven once again by large contractions in housing activity. Likewise, New work fell amid weak demand and a drop in new orders, sparking another round of job losses, with employment falling at a slightly sharper rate.

Additionally, the downsizing and cost-cutting were reflected in a sharp contraction in input purchasing and marked reductions in the use of subcontractors. However, cost burdens rose only modestly. “Eurozone builders see little light at the end of the tunnel,” said Norman Lipke, economist at Hamburg Commercial Bank. Added, “Pessimism has deepened in Germany and France, fearing weaker demand in the next 12 months, while optimism in Italy has eased to a 22-month low.”

EUR/USD Technical analysis and forecast:

If the bulls give up the psychological resistance level of 1.1000, there may be opportunities for selling operations for the EUR/USD pair. According to the performance on the daily chart, breaking the support of 1.0820 will end the hopes of rising and the bears will control the trend again. Moreover, our recommendation to sell the Euro Dollar from the resistance of 1.1000 is still valid and profitable. Technically, the price of the Euro Dollar will continue to be affected by the future policies of global central banks and the extent of investors' appetite for risk or not.

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