Fibonacchi Retracment in Play
On Monday, the direct currency pair EUR/USD managed to bounce back nearly 20-25 pips from 4-month lows, though it lacked any follow-through bullish bias. For now, the EUR/USD is seen trading with modest gains, around the 1.1765 areas heading into the European session.
The covid-19 updates from Australia and progress over the U.S. stimulus also favor the market trading mood. As per the recent updates, the $1.0 trillion stimuli is set for final passage from the Senate, which might be Tuesday. However, the House of Representatives will require to asset the bill before it reaches President Biden for a sign.
At the data front, China's headline Consumer Price Index (CPI) MoM rose past +0.2% market expectations and -0.4% before +0.3% in July. In contrast, the Producer Price Index (PPI) crossed the 8.8% YoY forecast and prior level to 9.0%. In addition to this, the latest U.S. jobs report, released on Friday, said nonfarm payrolls grew by a better-than-expected 943,000.
Friday's blockbuster U.S. labor market report stoked speculations that the U.S. central bank could begin tapering its QE (asset purchases) sooner this year. The sentiments pushed investors to bring forth the likely timing for the Fed policy contraction. This was obvious from the continuing move up in the U.S. Treasury bond yields. The unemployment rate dropped to 5.4% in July. Investors keep their eyes on further data, including the core consumer price index (CPI). Thus, the prevalent risk-on mood and the firmer USD will keep the gold remain pressured.
Despite the positive catalysts, the broad-based U.S. dollar managed to extend its early-day positive moves. During the 2nd half of the Asian session, it remained well bid as vital U.S. jobs data increased hopes that the U.S. Federal Reserve would hike interest rates and begin asset tapering earlier than expected.
Later today, during the U.S. session, trader's focus will shift on the scheduled speeches by Atlanta Fed President Raphael Bostic and Richmond Fed President Thomas Barkin for further clues on Fed policy. These speeches, along with the wider market risk sentiment, might offer some trading shots in the EUR/USD pair.
EUR/USD Intraday Technical Levels
Support Resistance
1.1851 1.1890
1.1835 1.1913
1.1811 1.1930
Pivot Point: 1.1874
EUR/USD - Technical Outlook
On Monday, the EUR/USD is trading choppy, maintaining a narrow trading range of 1.1769 – 1.1741 level. The EUR/USD pair has entered the oversold zone as we can see on the 4 hour timeframe. The Fibonacci retracement indicator is extending resistance at 23.6% level of 1.1770 level. Bullish crossover of this level expose EUR/USD pair towards 38.2% Fibobacci retracement level of 1.1785 level. Further upward movement in EUR can expose it towards 61.8% Fibo level of 1.1813 level. The support levels hold at 1.1740 level and breakout below this level expose the pair towards 1.1732 and 1.1702 levels. The EUR/USD bullish correction can be seem today on Monday. All the best.
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