EUR/USD clings to mild losses near 1.0700 as hawkish Fed concerns gain aceptance, US data eyed

EUR/USD retreats to 1.0695 as it drops for the second consecutive day heading into Monday’s European session, sticking to minor losses of late. In doing so, the Euro pair takes clues from the market’s hawkish bias surrounding the Federal Reserve (Fed), especially after Friday’s strong US Nonfarm Payrolls (NFP).

During the weekend, International Monetary Fund (IMF) Managing Director Kristalina Georgieva suggested that the Fed needs to do more to tame inflation. “We don’t yet see a significant slowdown in lending. There is some, but not on the scale that would lead to the Fed stepping back,” the IMF’s Managing Director Kristalina Georgieva told CNBC’s Karen Tso Saturday in Dubrovnik, Croatia.

It’s worth noting that the US NFP rose to the four-month high on Friday while bolstering the hawkish Fed bets, which in turn propels the US Dollar Index (DXY) of late.

Also adding strength to the DXY is the avoidance of the debt-ceiling expiration as the US policymakers managed to extend the limit until 2024. Furthermore, fears of the fresh US-China tension over Taiwan and the Russia-Ukraine rhetoric also weigh on the sentiment and allow the EUR/USD bears to remain hopeful.

Elsewhere, the growth and inflation numbers from Eurozone have been downbeat at the latest, which in turn favors the Fed hawks and exerts downside pressure on the EUR/USD price.

Looking forward, EUR/USD price remains pressured towards the previous monthly low marked on Thursday around 1.635 as traders await the US ISM Services PMI and Factory Orders for May. Should the scheduled data defy downbeat expectations and print strong outcomes, the Euro bears will have an additional reason to cheer.

Technical analysis

A convergence of the 200-day EMA and an upward-sloping trend line from late November 2022, around 1.0690-85, challenges the EUR/USD bears.