- EUR/USD has recovered toward 1.0200 following Friday's selloff.
- Hawkish Fed bets help the dollar stay resilient against its rivals.
- The pair could struggle to extend its recovery unless it clears 1.0250.
EUR/USD has staged a rebound toward 1.0200 at the start of the week after having suffered heavy losses on Friday. The pair could find it difficult to gather bullish momentum unless it clears the significant resistance that aligns at 1.0250.
The US Bureau of Labor Statistics announced on Friday that Nonfarm Payrolls increased by 528,000 in July, beating the market expectation of 250,000 by a wide margin. Additionally, the publication revealed that wage inflation, as measured by the Average Hourly Earnings, remained unchanged at 5.2% on a yearly basis. This report caused markets to reassess the Fed's rate outlook and the probability of a 75 basis points rate hike in September jumped to 70% from 30% earlier in the week.
Moreover, Fed Governor Michelle Bowman said over the weekend that she strongly supported the 75 bps hike last month and added that "similarly-sized increases" should be on the table until there is a consistent decline in inflation.
The US economic docket will not feature any high-impact data releases on Monday and the risk perception could influence EUR/USD's action in the second half of the day. In the early European session, US stock index futures are up between 0.3% and 0.5%. If risk flows start to dominate the financial markets, the pair could continue to edge higher but hawkish Fed bets should limit its upside.
Meanwhile, the data from the euro area showed on Monday that the Sentix Investor Confidence improved modestly to -25.2 in August from -26.4 in July but this data failed to help the shared currency gather strength.
EUR/USD Technical Analysis
EUR/USD faces interim resistance at 1.0230 (Fibonacci 38.2% retracement of the latest downtrend) ahead of 1.0250 (200-period SMA on the four-hour chart). With a four-hour close above the latter, buyers could show interest and open the door toward the next bullish target at 1.0300 (psychological level, Fibonacci 50% retracement).
On the downside, additional losses toward 1.0150 (Fibonacci 23.6% retracement) and 1.0100 (psychological level, static level) could be witnessed in case 1.0200 (100-period SMA, 50-period SMA) is confirmed as resistance.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.