EUR/USD has shown a modest recovery in the European session on Monday after facing strong bearish pressure in the previous week. The pair closed deep in negative territory for three consecutive days, losing over 1% on a weekly basis. Currently trading above 1.1050, the pair is staging a technical correction.
The US Dollar (USD) maintained its strength ahead of the weekend, despite little attention being paid to the Personal Consumption Expenditures (PCE) Price Index figures for July. The annual PCE inflation remained steady at 2.5%, while the core PCE Price Index rose 0.2% on a monthly basis as expected.
With the US markets closed for the Labor Day holiday, trading activity is expected to be subdued for the day. However, investors will be closely watching for the ISM Manufacturing PMI for August on Tuesday, along with other data releases later in the week.
EUR/USD Technical Analysis
EUR/USD has started to edge higher after approaching the key level of 1.1040, where the Fibonacci 38.2% retracement of the latest uptrend is located. The pair is currently trading above the 100-period Simple Moving Average (SMA) on the four-hour chart, around 1.1060. If this level holds as support, the next resistance levels to watch for are 1.1100 and 1.1130.
On the downside, a break below 1.1060 could lead to a retest of 1.1040, with potential further downside towards 1.1000. Technical sellers may show interest if the support levels are breached.
Analysis and Impact on Finances
The recovery in EUR/USD seen in the European session follows a period of bearish pressure, indicating a potential reversal in the short term. With US markets closed for the Labor Day holiday, trading volume and volatility are expected to be lower. However, upcoming data releases, including the ISM Manufacturing PMI, could impact the pair’s movement later in the week.
For investors and traders, it is important to monitor key technical levels, such as 1.1060 and 1.1040, for potential trading opportunities. The US economic data releases will also provide insights into the health of the economy and could influence the direction of the USD. Stay informed and stay ahead in the dynamic forex markets.