EURUSD has settled in a limited trading range after an aggressive sell-off on Friday, with strong US NFP employment data sent the greenback higher across the board. As a result, the euro broke down of its consolidative trading range and registered over two-week lows marginally above 1.12.
Despite spectacular employment data, Fed Fund futures continue to reflect a 100% probability for a 25bp rate cut later this month, which should cap the local downside pressure on the common currency. In this context, the upcoming Fed Chair Powell’s testimony and the release of the FOMC monetary policy meeting minutes will be in focus this week. Should the central bank confirm its dovish shift, citing economic risks and the lingering US-China trade tensions, the pair could gain amid a broad-based dollar weakness.
Technically, EURUSD stays below the key hourly moving averages, which is a short-term bearish sign. In the daily charts, the pair needs to get back above the 100-DMA around 1.1260 in order to target the 1.13 barrier once again. A break below the 1.12 support will lead to increasing selling pressure on the pair.