EUR/USD keeps bounce off three-month low towards 1.1900 amid mixed cues

EUR/USD grinds higher above 1.1860, following Friday’s recovery from the three-month bottom, amid the initial Asian session on Monday. The major currency pair benefited from the US employment report the previous day, not to forget comments from ECB President Christine Lagarde. However, the latest indecision portrays the ECB policymakers’ comments published during the weekend, as well as a lack of major developments.

Consolidation or trend reversal?

US jobs report for June gave rise to hopes of the Fed’s sustained easy money policies even as the headline Nonfarm Payrolls (NFP) jumped past the 700K forecast and upwardly revised 583K prior. The reason could be traced from an uptick in the Unemployment Rate to 5.9% from 5.8%, versus 5.7% market consensus, coupled with no change in Participation Rate of 61.6%.

Following the employment release, the market sentiment improved and consolidated the US dollar gains, bottoming out the EUR/USD from early April lows. However, the risk-on moves fade afterward as markets reassess the catalyst suggesting heating inflation and no-so-bad economics, coupled with the US unlocks, to favor the monetary policy adjustment hopes, which in turn puts a safe-haven bid under the US dollar.

Meanwhile, ECB President Lagarde said, on Friday per Reuters, that the eurozone economy is beginning to rebound from a pandemic-induced slump but the recovery remains fragile. The same backs the hopes of the continuation of the central bank’s monetary policies despite challenges from the latest inflation figures.

It should, however, be noted that Dutch central bank president Klaas Knot said in NRC Handelsblad, per Reuters, “Rising inflation in Europe may not be temporary.” On the contrary, ECB Executive Board Member Isabel Schnabel said, “Fear about inflation being too high is unfounded.”

Amid these plays, coupled with a lack of major catalysts, S&P 500 Futures wobble around record top after a stellar seven-day uptrend.

Moving on, a lack of major data/events and off in the US may restrict EUR/USD moves. Though, June’s activity numbers from the bloc may offer intermediate moves.

Technical analysis

EUR/USD struggles to keep the monthly resistance breakout, now support around 1.1830, suggesting a retest of a downward sloping support line from early May, near the 1.1800 threshold. Meanwhile, the 1.1900, late June tops near 1.1975 and the 200-DMA level of 1.2005 challenges the bulls.