- US Dollar weakened modestly on Monday as market sentiment improved.
- Incoming data during the week includes Eurozone preliminary August CPI, US Core PCE, and Nonfarm Payrolls.
- The EUR/USD holds a bearish bias, hovering around the 200-day SMA.
The EUR/USD rose modestly on Monday amid a softer US Dollar, after posting its lowest daily close since mid-June on Friday following Federal Reserve Chair Jerome Powell's speech at Jackson Hole. As key economic reports lie ahead, market volatility may emerge.
The US Dollar weakened at the beginning of the week due to an improvement in market sentiment, supported by additional measures from China. Stocks in the US and Europe rose, while government bond yields declined. This context weighed moderately on the US Dollar, causing the US Dollar Index to retreat towards 104.00.
Regarding economic data during the American session, the Dallas Fed Manufacturing Index showed an improvement from -20 to -17.2, although the details were not overwhelmingly positive. The focus now turns to upcoming employment and inflation data. On Tuesday, the JOLTS Job Openings report will be released.
In terms of European data, attention is also focused on inflation reports. Eurozone countries will start releasing preliminary August Consumer Price Index (CPI) data on Wednesday. On Tuesday, the German Gfk Consumer Confidence survey is scheduled to be released.
EUR/USD short-term technical outlook
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The daily chart shows a clear downside bias, but technical indicators suggest some consolidation after a rebound on Friday, with the price hovering around the 200-day Simple Moving Average (SMA). Technical indicators show no strong conviction in either direction.
On the 4-hour chart, there is an attempt to rise above the 20-period SMA near 1.0820. Above that level, the next resistance stands at 1.0845, followed by 1.0865. The Euro would need to rise above 1.0880 to improve its technical outlook. However, as long as it remains below that level, the risks are tilted to the downside. The technical indicators offer mixed signals, with the Relative Strength Index (RSI) pointing to the upside and the Momentum turning south. The consolidation phase could persist, but a slide below 1.0790 could potentially push the Euro towards new lows in this scenario.
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