EUR/USD: Pullback stalls as US manufacturing data shows drop in employment

• EUR/USD is sidelined near 1.1765, having hit lows near 1.17 on Monday. 
• Job losses in the US manufacturing sector weigh over the US dollar. 

EUR/USD’s pullback from Friday’s 26-month high of 1.1909 looks to have stalled with key data reviving concerns about the health of the US job market. 

While the US ISM Manufacturing headline figure climbed to a 15-month high of 54.2 in July, the employment sub-index remained well below 50%. The below-50 reading suggests that companies continued to reduce jobs in July. 

The data released during Monday’s US trading hours put brakes on the US dollar’s oversold bounce, restricting downside in EUR/USD near 1.17. The pair has since then regained some poise to trade around 1.1765. 

The greenback looked set to chart a notable bounce on Monday with market sentiment around the currency reaching extremes and technical indicators reporting oversold conditions. However, the dismal employment sub-index of the ISM Manufacturing played a spoilsport. 

With focus back on the health of the US economy, the dollar may remain under pressure on Tuesday and push EUR/USD back above 1.18 – more so, as the European equities are likely to track their Asian counterparts higher. That would further weaken the demand for the greenback. 

On the data front, Spain’s Unemployment Change and the Eurozone Producer Price Index are scheduled for release during Tuesday’s European trading hours. Later in the day, the focus would shift to the US Factory Orders data for June. 

Technical levels