EUR/USD retreats towards 1.1800 on sour sentiment, US data eyed

• EUR/USD edges lower around intraday low after four-day uptrend refreshed monthly top.
• Covid woes, firmer Treasury yields underpin US dollar rebound.
• ECB tapering concerns, downbeat US job-related numbers keep buyers hopeful.
• US Q2 Nonfarm Productivity, Jobless Claims and Factory Orders awaited ahead of NFP.

EUR/USD holds lower ground near 1.1840, after four consecutive days of rises to the monthly top. That said, the major currency pair seesaws around the intraday low and probes the recent uptrend amid sluggish markets.

Behind the moves are mixed concerns fuelled by the coronavirus woes and chatters over the central bank actions. Also contributing to the dull markets is the lack of major data/events.

A record jump in Australia’s daily covid cases, by 1,466 cases for Wednesday, per the latest data from ABC News, joins worrisome virus numbers from New Zealand and the UK to challenge the previous optimism. It’s worth noting that Japan is also up for extending the virus-led state of emergency in Tokyo and 20 other prefectures by another two weeks.

On the other hand, Germany’s Bundesbank President Jens Weidmann backed the ECB tapering chatters on the bloc’s recently upbeat statistics whereas softer signals for the US jobs report hint at delayed tapering by the US Federal Reserve (Fed).

The US ADP Employment Change for August rose 374K versus expectations of a 613K rise. Further challenging the jobs scenario was the employment component of the ISM Manufacturing PMI that slumped to the contraction region with the 49.0 figures against 52.9 prior. From the bloc, Markit PMIs for August and German Retail Sales for July were both downbeat but a fall in the Eurozone Unemployment rate favored the European Central Bank (ECB) hawks.

Against this backdrop, S&P 500 Futures and the US 10-year Treasury yields remain pressured, mostly unchanged, while the US Dollar Index (DXY) keeps late Wednesday’s bounce off monthly low.

Looking forward, the European calendar is mostly silent but the US Q2 Nonfarm Productivity, Weekly Jobless Claims and Factory Orders for July will be watched to clarify downbeat forecasts of the US Nonfarm Payrolls (NFP) and propel the EUR/USD should the actual data softens.

Technical analysis

The currency major pair justified a clear break of 50-DMA and firmer RSI conditions to refresh the highest levels since August 05 the previous day. However, a downward sloping trend line from June 25 challenges the quote’s immediate upside. Given the successful break of the key moving average and RSI conditions, EUR/USD stays on the bull’s radar unless declining below 1.1800 level, near to the 50-DMA, but further advances hinge on the upside break of the stated resistance line near 1.1845.