Current Price Action: EUR/USD opened near 1.0920 in New York after hitting 1.09050 overnight. The pair traded within a tight range of 1.0910-1.09362 for most of the New York session, closing slightly down by 0.06% in the afternoon. The pair held above key short-term support levels, which included the August 5 daily low and the 25-Day Moving Average (DMA), providing comfort to long positions.

Support and Resistance Levels:

• Support Levels:
  • 1.0901: 15-DMA and  low
  • 1.0885: Near the 50% Fibonacci retracement of the 1.0770-1.1004 rally
• Resistance Levels:
  • Immediate resistance around 1.09360 (day's high)
  • Psychological and technical resistance at 1.1100

Technical Indicators:

• Mixed signals from RSI: Rising monthly RSI suggests bullish momentum, while falling daily RSI indicates potential short-term weakness.
• Formation of long lower wicks on daily candles for the past two sessions, indicating buying interest at lower levels and potential consolidation of recent gains.

Market Sentiment and Influences: EUR/USD traded lower on Wednesday but maintained support due to positive sentiment driven by German-U.S. yield spreads. These spreads, particularly the two-year spread which EUR/USD is correlated with, have recently been at their tightest since July 2023 following a U.S. payroll report indicating slower job growth. The current widening of these spreads is helping EUR/USD hold above key support levels.

Economic Data and Yield Impacts: Investors are keeping a close eye on U.S. weekly and continuing claims reports due on Thursday. Upside surprises in these reports, indicating an acceleration of job cuts, could lead to lower U.S. yields as market participants might anticipate a 50 basis point cut by the Federal Reserve in its September meeting. This scenario could further tighten yield spreads, potentially supporting a resumption of EUR/USD's recent rally and a test of the 1.1100 area.

Overall Outlook: The balanced risks for EUR/USD, combined with the technical support levels and yield spread dynamics, suggest that while there are mixed signals, the pair has the potential to consolidate and possibly resume its upward trend if economic data aligns with market expectations. Bulls appear confident, buying dips, and positioning for potential further gains if U.S. economic data supports a dovish Fed outlook.