The US dollar is currently under substantial pressure, primarily due to signs of a cooling labor market and waning economic vitality. The latest ADP Employment data released on Wednesday painted a picture of unexpected softness in labor demand within the private sector. Private employers added only 150K jobs in June, falling short of the anticipated 160K. This shortfall indicates that the labor market might be losing steam, which is never a positive signal for the greenback.

Adding to this sentiment, the Initial Jobless Claims for the week ending June 28 came in higher than expected at 238K, surpassing the forecasted 235K. This uptick in jobless claims suggests that more individuals are entering the unemployment pool, further indicating a slowdown in labor market momentum.

The EUR/USD chart shows that the price has reached a key supply line, which could serve as a significant resistance level. The ascending trend line indicates bullish momentum since September 2023, with higher lows forming a solid support base. The recent bullish movement towards the supply line suggests that the pair may be testing this resistance, and a breakout above could signal further upside potential. However, if the supply line holds, the EUR/USD could face a pullback, potentially retesting lower support levels. The RSI indicator is approaching overbought territory, which might suggest a temporary retracement before the next directional move:

The recent Federal Reserve minutes reinforced the notion that the Fed is in a data-dependent stance, waiting for concrete evidence of inflation easing. However, there's an internal divide on how long interest rates need to remain elevated, reflecting uncertainty and cautiousness within the Fed ranks. This ambiguity isn't particularly supportive of the dollar, as investors crave clarity on the Fed’s future monetary policy direction.

On another front, the US economy’s health looks somewhat fragile. The ISM Services PMI, a critical barometer of the service sector's activity, contracted to 48.8 in June from 53.8 in May, missing the expectation of 52.5. A reading below 50 signals contraction, hinting at reduced economic activity.

Across the Atlantic, the euro has shown resilience, partly bolstered by political maneuvers in France ahead of Sunday’s parliamentary elections. The Central Alliance, led by president Emmanuel Macron and his left-wing allies, is strategically withdrawing candidates to prevent the far-right National Rally from gaining an absolute majority. This move aims to avert potential policy shifts that could destabilize France's financial landscape further.

Moreover, the preliminary Eurozone inflation report for June revealed that the annual headline HICP softened to 2.5%, while the core HICP, excluding volatile items, remained steady at 2.9%. These figures suggest that while inflationary pressures are present, they might not be intensifying at a worrisome pace, providing a semblance of stability to the euro.

Looking ahead, interest rate futures indicate a broad expectation of a rate cut by the Fed in September, with the odds now standing at approximately 67% for a 25 basis point cut. This expectation is contributing to the USD's weakness and supporting the EUR/USD's upward trajectory.