EUR/USD: Bulls firming, eyes on M-formation neckline before 1.1410 break

EUR/USD is under pressure in the opening session this week, with China returning from holiday's and digesting another bumpy ride on Wall Street on Friday due to upbeat economic data in the form of Nonfarm Payrolls surprises. The US dollar, as measured by the DXY index, is trading at 95.555 and near flat on the day but the euro is heavy and losing some 0.1% at the time of writing. 

The greenback is consolidating Friday's price action where it rallied from a two-week low after the Nonfarm Payrolls data showed that the world's largest economy had created far more jobs than expected. The data showed that Payrolls grew 467,000 jobs last month and data for December was revised higher to show 510,000 jobs created instead of the previously reported 199,000. Reuters had forecast 150,000 jobs added in January while estimates ranged from a decrease of 400,000 to a gain of 385,000 jobs.

The case for Federal Reserve rate hikes was cemented This led to gold prices falling under pressure from a firmer dollar and higher US Treasury yields.

Looking ahead, analysts at ANZ Bank commented in a note and explained that ''January Consumer Price Index data this week are expected to show headline and core inflation remain elevated. Any sizable upward surprise would add to the case for the Fed starting off more aggressively.''

''Owing to very high energy prices and a broadening in underlying inflation pressures, the risks lie to the upside of the market’s 7.3% YoY forecast,'' analysts at TD Securities explained. ''Based on the inflation prints in other countries, a number in excess of 7.5% YoY is feasible.''

Meanwhile, there is a focus on Russian headlines from the weekend that could weigh on risk appetite and the euro as a consequence:

 Risk-off and stronger US dollar is the opening theme

EUR/USD technical analysis

Meanwhile, EUR/USD is attempting to first in the lastest hour which leaves the neckline of the H1 M-formation vulnerable to a test. The bears will not be far behind, however, and eyes are on a break below 1.1410 for a run to 1.1330 for the sessions ahead. 

EUR/USD H1 chart