EUR/USD remains depressed ahead of US employment, Factory Orders data

• The Euro recovery against the USD was short-lived, and the pair has given away previous gains.
• A somewhat brighter market mood has triggered a moderate US dollar pullback.
• Later in the day, US Factory Orders and JOLTS Job Openings will provide further guidance to the USD.

The EUR/USD pair has been capped at 1.1665 during the European morning trrafde, before returning below 1.1650, which leaves the pair in no man's land, at the lower end of the monthly trading range. The Euro bounced up earlier on the day, supported by easing concerns about the fiscal deficits, but it has been unable to take a significant distance from Tuesday's lows

Data from the Euro Area has been mixed. August's services PMI showed a slower-than-expected growth in August, while the Producer Prices Index (PPI) grew faster than expected, giving further reasons to the European Central Bank (ECB) to keep interest rates unchanged after next week's monetary policy meeting.

Beyond that, long-term bond yields are pulling back from Tuesday's highs, which is contributing to improving the market mood. The German 30-year yield has eased to levels below 3.4% after touching highs near 3.44, although it remains well above the levels seen in mid-August and nearly 100 basis points above the ear-opening levels. Likewise, French long-term yields have eased below 4.50%, but remain close to their highest levels since 2009, buoyed by the country's uncertain political outlook.

The US Dollar is trimming some gains as the market shifts its focus to the US JOLTS Job Openings and Factory orders figures for July that are expected to show further evidence of an economic slowdown, and might increase negative pressure on the USD.

Daily digest market movers: Eurozone debt fears have offset investors' expectations of Fed rate cuts

• Concerns about fiscal recklessness in major economies have returned to the market, triggering a sell-off in government bonds worldwide. Fed interest rate cuts have taken the back seat, and the US Dollar (USD) has rallied against its main peers on the back of its safe-haven status.
• Eurozone data released on Wednesday has shown that services activity in the region expanded at a 50.7 level in August, according to final data from the Hamburg Commercial Bank (HCOB). These figures are lower than the previous estimations of 50.7 and from July's four-month high of 51.
• Also in the Euro Area, July's Producer Prices Index has shown a faster-than-expected growth with a 0.4% monthly reading, beating expectations of a 0.2% growth, and a 0.2% yearly increase, also beating market expectations of a 0.1% increment.
• On Tuesday US ISM Manufacturing PMI improved to 48.7 in August from 48.0 in July, undershooting the market expectations of a 49.0 reading.
• Somewhat earlier, the S&P Global Manufacturing PMI showed a brighter picture, with a 53 reading, after 53.3 in July, yet with the report highlighting higher prices and supply concerns stemming from US President Donald Trump's trade tariffs.
• Later on Wednesday, July's Factory Orders are expected to have contracted at a 1.4% pace, following a 4.8% fall in June, providing further evidence that tariffs are already weighing on industrial activity.
• At the same time, the US JOLTS Job Openings will be the first of a string of labour market indicators this week and are expected to have remained fairly steady, at 7.4 million in August after July's 7.437 million openings.

Technical Analysis: EUR/USD declines within range, with key support at the 1.1585 area

EUR/USD came under pressure after its rejection at 1.1740 on Monday. Looking from a wider perspective, however, the pair remains looking for direction within the broadly 150-pip range that has contained price action for most of August.

The pair seems to have found some footing at Tuesday's lows around the 1.1615 area, ahead of the bottom of the monthly range between 1.1575 and 1.1590, which capped bears on August 11, 22, and 27. Further down, the 50% Fibonacci retracement level of the early August bullish run, at 1.1560, might provide some support ahead of the August 5 low, near 1.1530.

To the upside, the intraday level of 1.1680 might offer some resistance ahead of the confluence between the descending trendline resistance, now around 1.1730 and 1.1740, which encompasses the peaks of August 13 and 22, and the September 1 high, is likely to pose a serious challenge for bulls.