06.07.202110:39 Forex Analysis & Reviews: Dollar slumps amid mixed employment data in US

Demand for dollar decreased sharply after employment data released last week showed mixed dynamics. On the one hand, the number of people employed in the US non-farm sector rose more-than-expected, while on the other hand, the overall unemployment rate increased, which brought concerns that the Federal Reserve will delay cutting back bond purchases.

And this week, buying pressure will persist in risky assets, at least until the publication of the minutes of the Federal Reserve's June meeting. The notes will bring more clarity to the future actions of the central bank, especially on the quantitative easing program.

As for the Eurozone, latest reports indicate that investor confidence continued to increase for five consecutive months, and in July this year reached its highest level in almost three and a half years. Sentix said the index rose to 29.8 points, thanks to the strong recovery of the Eurozone economy. The present situation index also grew for five consecutive months, reaching 29.8 points.

The main reason is the obvious improvement in economic activity, which, according to IHS Markit, grew at the fastest pace in June. The data said composite PMI climbed to 59.5 points, from 57.1 in May. Service PMI also jumped to 58.3 points. It was Spain's private sector that grew the most, while Germany posted the fastest growth in more than a decade. Italy and France also showed their best performances in almost three and a half years.

Unfortunately, growth did not extend to industrial production, as according to a recent report from France, output in the country fell amid a marked drop in the production of transport equipment. Insee said the index declined 0.3% in May, after posting a 0.1% rise in April. However, this is not a surprise to investors as they already expected a decline amid growing cases of COVID-19 infections.

As noted above, all this resulted in a slight recovery in EUR / USD, but today a lot will depend on 1.1885 because climbing above it will lead to a further increase towards 1.1920 and 1.1980. But if the quote drops below 1.1885, the pair will slip to 1.1840, and then to the base of the 18th figure.

GBP

Demand for pound increased amid better PMI data from UK. The IHS Markit said the index reached 62.4 points in June, thanks to the sharp rise in new orders. However, there was a slight decrease in export sales among service companies due to restrictions on international travel and quarantine policies, hence, composite PMI, which takes into account production, valued 62.2 points.

Today, a lot depends on 1.3870 because going beyond it will result in a larger jump towards 1.3925. But if the quote slips below 1.3870, GBP/USD will decline to 1.3820.