Fundamental analysis of EUR/USD

EUR/USD is flat after yesterday's decline, trading around 1.09500 under the influence of the services PMI data, which increased fears of a recession in the Eurozone. 
 
The recent decline was fueled by disappointing private sector PMI data in Germany, with factory orders expected to fall 1.5% in June after rising 6.4% in May. As Germany is the manufacturing center of the Eurozone, weak manufacturing activity is seen as a negative indicator, raising fears of a prolonged economic slowdown. No comments from ECB board members are expected to sway the markets, so media interaction could be a deciding factor. On the other hand, the US session was boosted by expectations of the US employment report. Forecasts suggest that average hourly earnings may rise from 4.4% to 4.2%, while the unemployment rate will remain unchanged at 3.6%. These indicators are important because the U.S. labor market is an integral part of the Federal Reserve's dual mandate. A tighter labor market could lead to faster wage growth and demand-driven inflation, as well as higher borrowing costs, which could hinder hiring and wage growth. The U.S. labor market is indeed performing well, with private sector employment numbers exceeding expectations in July at 324,000. Favorable data drove the yield on 10-year US Treasuries to its highest level since November and the US Dollar Index rose to a near one-month high. However, there were declines in job announcements and the employment index. 
 
Market attention now turns to the US non-farm payrolls report. It is expected that in July the number of employed people will increase by 200 thousand, the unemployment rate will remain unchanged at 3.6%, and the monetary inflation will slightly decrease. The Fed's recent rate hike to 5.5% has increased uncertainty and comments from Chairman Jerome Powell leave the door open for further adjustments based on market data. With the probability of a Fed rate hike before the end of the year approaching 30%, EUR/USD is under continued downward pressure. Stronger than expected agricultural payrolls and high wage inflation could increase expectations of further Fed policy tightening, pushing EUR/USD lower. On the other hand, disappointing numbers that could lead to a rally in the pair suggest that the US labor market is cooling, leading market participants to expect no change in US Fed policy. 
  
Technical analysis and scenarios:

Stochastic Oscillator: Stoch(5,3,3) is at 81.8119 with a signal at 78.9842, indicating an overbought market. This could signal a potential downside reversal. The Bollinger Bands show that the price is in a lower range: the upper band is at 1.10015, the middle band is at 1.09615 and the lower band is at 1.09165. The bands are pointing downwards and the price range is narrowing, indicating potential bearish momentum. MACD(12,26,9) values indicate a slight bullish convergence, but with values close to zero, it does not give a strong signal.
Main Scenario (SELL)
Recommended entry level: 1.09000.
Take Profit: 1.08140.
Stop Loss: 1.09500.
Alternative scenario (BUY)
Recommended entry level: 1.10690.
Take Profit: 1.11400.
Stop loss: 1.10200.