Euro defends the 1.1500 level ahead of a string of US labour data

• EUR/USD finds support at the 1.1500 area on Tuesday after a pullback from 1.1560 highs.
• Uncertainty surrounding the US-Iran conflict and caution ahead of the release of US jobs data are keeping US Dollar volatility contained.

The Euro (EUR) posts marginal gains against the US Dollar (USD) on Tuesday as Monday’s reversal from three-week highs at 1.1560 has been contained at 1.1500 so far. A mild risk appetite on hopes of a negotiating process in Iran and investors’ cautiousness ahead of the release of key US labour indicators are providing some support to the pair on Tuesday.

The Middle East conflict is in a standstill with the US and Iran holding fire so far, but sending contradictory messages. US President Donald Trump urged Tehran to sign a peace deal with the US and reopen the Strait of Hormuz. Iranian authorities, in turn, have denied any contacts with the US and reiterated their threat to the US Navy if the blockade of Iranian ports continues.

US employment figures in focus

Apart from that, the US JOLTS Job Openings and Factory Orders figures will provide some distraction from the geopolitical scenario and set the tone for a string of key US labour reports due later in the week. The main focus this week will be the Nonfarm Payrolls report, due on Friday, which is expected to provide further clues about the Federal Reserve’s near-term monetary policy.

According to TD Securities, the recent strength in US labour demand is unlikely to persist. The bank expects that "June JOLTS job openings will decline back down to 7,000k from 7,594k in May (cons: 7,504k)," arguing that "the recent surge in openings is likely unsustainable."

Regarding the pair's near-term, outlook, FX analuysts at Rabobank warn that “the market continues to display a reluctance to rebuild EUR positions towards last year’s longs given uncertainty about how higher energy prices will impact the growth and inflation outlook in the Eurozone.” Against this backdrop, the bank foreseees "choppy ranges, mostly within the EUR/USD1.14/1.15 level likely to persist in the coming months,” as investors remain cautious about committing to fresh Euro exposure.