- EUR/USD retraces below the 1.1900 area on Monday.
- The dollar index gains some ground on the day.
- ECB Vice says that tapering the stimulus program will be a big mistake
The EUR/USD outlook is bullish despite a recent retracement of gains below the 1.1900 area. Greenback is slightly gaining after NFP dip.
During the Asian session, the EUR/USD pair showed small losses in its first trade of the new week. For the first time since August, the pair climbed above 1.1900 on Friday. However, it opened lower on Monday.
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Today, the EUR/USD pair has fallen 0.10 percent to 1.1863 at the time of writing.
Dollar indexes (DXY), which measure the dollar’s strength against six major currencies, bounced around 92.00, pushing the EUR/USD price.
According to the US Bureau of Labor Statistics, 235,000 new US jobs were created in August. Growth was well below market expectations at 750k. Unemployment decreased to 5.2% in August from 5.4%.
As dollar sell-off soared following Friday’s disappointing NFP data, the single currency rallied.
In anticipation of the European Central Bank (ECB) talking about tapering the purchase of bonds, investors are betting on the euro. However, a possible withdrawal of the stimulus package is now possible, as ECB vice president Luis de Guindos encourages a positive economic outlook in the bloc.
Likewise, Economic Commissioner of the European Union (EU) Paolo Gentiloni warned that monetary tightening by the ECB is “a big mistake.”
Investors look at German manufacturing orders, the Purchasing Managers’ Index for Construction (PMI), and the PMI for Construction in the EU for insight into trade.
EUR/USD price technical outlook: 20-SMA to support
The EUR/USD pair is declining on the day. The pair may find some respite around 20-period SMA on the 4-hour chart. The volume is, however, not encouraging for the bears. This could only be a retracement that may find some bulls around key support of 1.1860 ahead of 1.1825 (50-period SMA) and then at 1.1805 (200-period SMA).
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On the upside, the pair may see a rise towards the double top at 1.1910 area ahead of 1.1950 and then 1.2000 (psychological mark).
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Saqib Iqbal
