In the coming days, traders will assess the ISM indices and the JOLTS/ADP data, culminating the week with July's Nonfarm Payrolls (NFP), which will largely determine market expectations regarding the Federal Reserve's monetary policy outlook.

Of course, geopolitical developments will remain in focus, especially in light of recent decisions by the US President. Donald Trump, for instance, recently canceled a large-scale strike against Iran. He stated that the United States was prepared to use military force against Tehran "not seen since World War II," but decided against the attack after communications from Iranian authorities and other Middle Eastern countries. According to the President, negotiators were able to coordinate the main parameters of a future deal, which is supposed to entail the immediate and complete reopening of the Strait of Hormuz and the cessation of Iran's nuclear program.

Iranian authorities have not confirmed the agreements mentioned by Trump, thereby keeping the intrigue alive. Additionally, according to Axios, the Crown Prince of Saudi Arabia indeed appealed to the US President to refrain from further strikes against Iran. Concurrently, mediators from Qatar held talks with Iran's Foreign Minister and representatives from Oman to unlock the Strait of Hormuz. The fact that the US President backed off from further escalation suggests that the parties have indeed reached some compromise.

If Washington and Tehran return to the negotiating table, the dollar will come under additional pressure. As geopolitical tensions ease, market participants are expected to shift more towards riskier assets (including the euro), while demand for the greenback will continue to weaken.

Moreover, the fundamental backdrop for the dollar worsened at the end of last week when data on US economic growth and the core PCE index were released.

To briefly recap, preliminary estimates indicate that US GDP growth slowed to 1.5% year-on-year in the second quarter (down from 2.1% in the first quarter). This result fell short of market expectations, heightening concerns about a loss of economic momentum. At the same time, the core PCE index rose by only 0.1% month-on-month (with a forecast of 0.2% growth). The annual figure slowed to 3.3% (from a previous peak of 3.4%).

Weaker-than-expected data on economic growth and inflation noticeably weakened the US currency. The US dollar index hit a six-week low, plunging to 99.57, while the EUR/USD pair, correspondingly, marked a six-week high at 1.1547.

Key releases for the upcoming week could either intensify pressure on the greenback or help it regain lost ground.

The first serious test for the dollar will be the ISM manufacturing index, which will be published on Monday, August 3. It is worth noting that the U.S. manufacturing sector has shown unexpected resilience over the past six months, remaining in the expansion zone, i.e., above the 50-point mark. According to preliminary forecasts, this indicator is also expected to demonstrate an upward trend in July, rising to 54.0 (after a slight decline to 53.3 in June). If, contrary to expectations, the manufacturing index approaches the "red line" of the 50-point watershed (and especially if it enters the contraction zone), the market will perceive this as yet another confirmation of a slowdown in economic growth. In this case, the dollar will be under significant pressure, as traders begin to price in a faster shift by the Fed towards easing policy.

No less important for the greenback will be the ISM Services report (expected on Wednesday), which is forecast to rise to 54.5 in July, after a slight decline to 54.0 in June. As is well known, the services sector remains the foundation of the American economy, accounting for a large share of GDP and employment. Therefore, the ISM Services index may prove even more important than the manufacturing index. If it falls into the "red zone" (even while remaining above the 50-point mark), the dollar will encounter a new wave of selling.

In addition to the ISM indexes, key labor market reports from the U.S. will set the tone for trading in the EUR/USD pair: JOLTS, ADP, NFP. The JOLTS report is considered one of the key preliminary indicators ahead of the Nonfarm Payrolls report, as it provides insight into whether companies are maintaining high demand for employees or beginning to cut hiring. Most analysts expect job openings to decrease in June to 7.420 million (down from 7.59 million previously). This is a key indicator. However, for the dollar, the most negative scenario would be a combination of falling job openings, weakening hiring, and rising layoffs, as such a signal would indicate a gradual cooling of the U.S. labor market.

The market also views the ADP report as a preliminary indicator ahead of the NFP, although its correlation with official data has weakened significantly recently. In light of the sharp slowdown in June's Nonfarms (only +57,000 new jobs), the July ADP report will help to understand whether the private sector continues to cool or if the previous weak result was a temporary deviation. According to forecasts, private-sector employment is expected to rise by only 70,000 in July. A weak ADP (especially if the figure is below the 50,000 mark) will heighten concerns that issues in the U.S. labor market are becoming more fundamental. Such a "preview" ahead of the NFP could exert significant pressure on the dollar. Conversely, a strong result (above 120,000-150,000) is capable of changing market sentiment, especially if accompanied by an increase in the employment component of ISM Services.

Finally, the main macroeconomic event of the week for EUR/USD will be the publication of the official U.S. labor market report for July. The release is traditionally scheduled for Friday (August 7). It will serve as a key benchmark for assessing the resilience of the U.S. economy and the future trajectory of the Fed's monetary policy. After a weak result in June, the market will seek an answer to the main question: was this weakness "situational," i.e., temporary, or has the labor market genuinely started to lose its resilience? Most analysts believe that the number of jobs in the non-farm sector will grow by only 88,000 in July – not much more than the previous month (+57,000). Such a result would indicate a continued trend towards cooling in the labor market.

The unemployment rate in the U.S. is expected to remain unchanged at 4.2%. However, in this case, the market will evaluate not only the figure itself but also its quality. If the labor force participation rate begins to decline again (in June, this indicator fell to 61.5%), then the "pretty" unemployment statistic will merely reflect some Americans leaving the labor force, rather than sustained hiring. A slowdown in wage growth is also expected – to 3.3% y/y, after a rise to 3.5% in the previous month.

As we can see, even the forecast result can exert pressure on the greenback. But if the release falls into the red zone (in particular, if job growth is below 75,000, the labor force participation rate sets another minimum, and the wage index is below 3.3%), the dollar will be under extremely strong pressure across the market.

From a technical perspective, the EUR/USD pair on the H4 timeframe is situated between the middle and upper lines of the Bollinger Bands indicator, as well as above all lines of Ichimoku, which has formed a bullish "Parade of Lines" signal. Such signals indicate a bullish bias, although local overbought conditions may prompt a minor correction. Bearish corrective pullbacks are best seen as opportunities to open long positions, with the first and currently only target of 1.1590 (the upper boundary of the Kumo cloud on D1). Overcoming this resistance will open the path for buyers into the 16th figure area.