EUR/USD slides against a firmer US Dollar with US data on focus

The EUR/USD pair is putting an end to a five-day positive streak on Tuesday, and extends losses from Monday's highs at 1.1735, reaching lows near 1.1630 ahead of the US session opening. The risk-averse sentiment is fuelling a US Dollar pickup that has been undaunted by the Eurozone's hotter-than-expected Consumer Prices Index (CPI) release.

Eurozone inflation edged up to a 2.1% yearly rate in August against market expectations of a steady 2% reading, and the core CPI remained unchanged at a 2.2% year-on-year rate. Market analysts had forecasted a slight moderation to 2.2%. These figures provide further reasons for the European Central Bank (ECB) to keep rates unchanged at next week's meeting.

The US Dollar, on the other hand, is posting a solid comeback after the last few days' decline, with US markets opening after a long weekend, due to the Labour Day bank holiday.

Later today, the US ISM Manufacturing Purchasing Manager's Index (PMI) will open a busy weekly calendar which closes with a key Nonfarm Payrolls report on Friday, with the Federal Reserve's (Fed) monetar ypolicy meeting around the corner.

Daily digest market movers: The US Dollar might remain vulnerable ahead of key data

• The Euro (EUR) is pulling back on Tuesday, remaining within the last four weeks' trading range. Trump's attacks on the Fed and market expectations that the US central bank will cut interest rates later in September are likely to limit the USD's upside attempts, while solid Eurozone macroeconomic figures and hawkish ECB rhetoric are likely to underpin the Euro.
• ECB board member Isabel Schnabel affirmed on Tuesday that interest rates are "mildly accommodative" at the moment and sees no reason for further monetary easing in the near term.
• On Monday, ECB President Christine Lagarde provided further support to the Euro, dismissing concerns about the French banking system and affirming that economic uncertainty has been "considerably reduced" in a speech suggesting that monetary policy will remain unchanged after September's meeting.
• Recent Eurozone data support that view, as the Eurozone HCOB Manufacturing Purchasing Managers' Index (PMI) was revised up to 50.7, from the 50.5 previous estimate, confirming that the sector's activity expanded in August for the first time in the last three years.
• In the US, the main attraction will be the ISM Manufacturing PMI due at 14:00 GMT, still, which is forecasted to have improved to 49 in August, from 48 in July, still at levels pointing to a contraction of the sector's activity.

Technical Analysis: EUR/USD remains in range, with 1.1740 resistance holding bulls

The EUR/USD is under increasing bearish 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.

Euro bears are likely to face significant support at 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 confluence between the descending trendline resistance, now around 1.1730 and 1.1740, which encompasses the peaks of August 13 and 22, as well as Monday's high, is likely to pose a serious challenge for bulls. A confirmation beyond here would clear the way towards the late-July lows around 1.1790, ahead of the July 1 high at 1.1830.