The data fueled expectations the Federal Reserve might postpone the withdrawal of economic stimulus

The dollar saw a bearish week to extend losses after the report showed that US employers added just 235,000 jobs in August versus +730,000 expected. The data fueled expectations the Federal Reserve might postpone the withdrawal of economic stimulus. Against this backdrop, the greenback extended losses to fresh multi-week lows ahead of the weekend. 

The dollar managed to shrug off the weak figures on Monday to turn positive across the board. Still, the recovery momentum looks too modest and fragile to bet on sustained gains in the short term.

EURUSD briefly exceeded the 1.1900 figure ahead of the weekend but failed to preserve gains ad retreated partially. Today, the pair slipped to the 1.855 area despite strong economic data out of Germany. Orders for German factory goods unexpectedly surged 3.4% in July versus -1.0% expected. On the negative side, however, Eurozone’s investor sentiment dropped to 19.6 in September from 22.2 in August versus a reading of 19.7 expected. The index fell to the lowest since April 2021б adding to some downside pressure surrounding the common currency.

On Tuesday, the pair could be affected by fresh economic data out of Germany and the Eurozone while the key market focus this week will be on the ECB meeting due on Thursday. Dovish rhetoric could push the common currency lower across the board. In this scenario, EURUSD may get back below the 1.1800 figure if the dollar refrains from deeper losses in the coming days.

As for the USD index itself, the prices bounced off sub-92.00 levels on Monday to reverse part of the recent sharp sell-off. The index advances to the 92.30 region. As a reminder, the trading activity would be low today due to the Labor Day holiday in the United States. 


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