EUR/USD consolidates daily losses around 1.1870 amid thin trading conditions
- EUR/USD continues to fluctuate in a tight range on Monday.
- US Dollar Index remains on track to post modest daily gains.
- Focus shifts to ZEW Survey and eurozone Q2 GDP data.
The EUR/USD pair reached its highest level since late July at 1.1910 on Friday and ended up closing the second straight week in the positive territory. With the trading action turning subdued on Monday, the pair erased a small portion of its gains and was last seen losing 0.12% on the day at 1.1870.
The disappointing August jobs report from the US triggered a USD selloff and allowed EUR/USD to gather bullish momentum. The US Bureau of Economic Analysis reported that Nonfarm Payrolls in the US increased by 235,000 in August. This print missed analysts' estimate of 750,000 and the US Dollar Index (DXY) dropped below 92.00 for the first time in a month. Currently, the DXY remains on track to close the day modestly higher as market conditions remain thin due to the Labor Day holiday in the US.
ECB will announce policy decisions on Thursday
On Tuesday, Eurostat will release the Gross Domestic Product growth figures for the second quarter. Investors expect the eurozone economy to contract by 0.6% on a quarterly basis. Additionally, the ZEW Survey - Economic Sentiment data from Germany and the EU will be looked upon for fresh impetus.
More importantly, the European Central Bank (ECB) will announce its Interest Rate Decision and release the Monetary Policy Statement.
Preview the ECB's September meeting, "discussions are certain to take place but is there unanimity or consensus to move forwards and rest purchases to EUR10 B - EUR15 B per week from October?" question Société Générale analysts. "If there is not, last week’s price action will turn out to have been a head fake, causing investors to reverse steepening trades in EGBs and swaps and take profits in EUR/USD.”
Technical levels to watch for