EUR/USD bulls get rejection above 1.1550 as USD licks NFP-led wounds
- EUR/USD struggles to extend Friday’s corrective pullback, retreats from intraday high.
- Market sentiment worsens amid mixed concerns relating to Fed tapering and China, DXY rebounds.
- US holiday, light calendar can restrict intraday moves, Wednesday’s inflation data, FOMC minutes eyed.
EUR/USD seesaws around 1.1570, retreats from intraday high heading into Monday’s European session. The currency major pair struggles for fresh clues after snapping a three-day downtrend the previous day, not to forget mentioning the consolidation phase around the lowest in 15 months.
The current indecision among the EUR/USD traders could be linked to the US dollar’s latest rebound, amid risk-off mood, in contrast to the doubts over Fed tapering and an absence of bond traders. That said, the US Dollar Index (DXY) consolidations Friday’s losses around 94.13, up 0.04% intraday by the press time.
China-linked fears join Brexit headlines and mixed concerns over the Fed tapering to underpin the latest risk aversion wave amid a quiet Asian session.
The fresh Sino-American tussles over phase one deal commitments challenge the market sentiment. Furthermore, Hong Kong and Taiwan face challenges from China and add to the risk-off mood.
Alternatively, disappointment from the US Nonfarm Payrolls combats favorable Unemployment Rate and Average Earnings to confuse traders. That said, NFP dropped to 194K versus 500K expected but the prior reading got an upward revision to 366K. On the same line, the Unemployment Rate dropped to 4.8%, versus 5.1% expected and 5.2% prior, soothing the pains, whereas Average Hourly Earnings also jumped past 0.4% expected and revised down previous readouts of 0.4% to 0.6%.
Against this backdrop, S&P 500 Futures print mild losses while the US bond trading remains at a halt during the Columbus Day partial off.
Other than the US dollar performance, a lack of clarity among the European Central Bank (ECB) board, concerning the central bank’s next move, joins the policymakers’ reflation fears to weigh on the EUR/USD prices. ECB President Christine Lagarde said on Friday that Rising energy prices, supply disruptions could hold back growth. The ECB Boss further added, “Need to manage the exit from the pandemic very carefully.”
Given the lighter calendar and US holiday, risk catalysts are the key for fresh impulse ahead of Wednesday’s inflation data from Germany, the US and Federal Open Market Committee (FOMC) Minutes for the latest monetary policy meeting.
Technical analysis
EUR/USD grinds lower towards the yearly bottom surrounding 1.1530, followed by March 2020 high near 1.1495, until staying below a downward sloping trend line from September 24 and 50-SMA on 4H, respectively near 1.1575 and 1.1590.