EUR/USD struggles to extend post-NFP recovery above 1.1800, Sentix eyed

EUR/USD tapped on 1.18 handle earlier on the day, however, further recovery momentum lacked follow-through, as the corrective slide in the US dollar stalled heading into early Europe.

EUR/USD: Bearish reversal to extend this week?

The spot is seen consolidating the post-NFP recovery, as the USD bulls take a breather and await the reaction from the European traders for the next push higher. A fresh bout of USD buying is expected on the European open, as the European traders will cheer Friday’s upbeat US jobs report.

The US employers added an above-forecast 209,000 workers in July and raised wages to 0.3%, while the unemployment rate ticked lower to 4.3% last month. The solid jobs report bolstered the global equities on increased confidence in the US economic outlook, which in turn boosted the odds for a Dec Fed rate hike. As a result, monetary policy divergence between the Fed and ECB is back into play, after the latest US labour market report and a less hawkish ECB.

Looking ahead, the US CPI data holds the key to seal in a Dec rate hike, which will have a major impact on the buck, while for today, the macro calendar remains light, with the Eurozone Investors’ Confidence Sentix Index and US LMCI data due on the cards. Besides, speeches by the FOMC members Kashkari and Bullard will be also closely heard in the NA session.

EUR/USD Technical Set-up  

According to Jim Langlands at FX Charts: “Technically, it looks as though the dollar’s weakness may have ended for the time being, and the charts generally hint that further downside pressure may be placed on the Euro. If so, below Friday’s low and the 31 July low of 1.1722 would allow a run back towards the 28 July low of 1.1670. Under there would see a test of the rising trend support, currently at 1.1620 and possibly on towards 1.1600 although not yet.”

“The topside looks a little limited  right now although the hourlies do need to correct their current oversold condition and we could see a rally towards 1.1800, and anything above there would seem to be a decent sell opportunity, “Jim added.