EUR/USD Edged Lower On Dollar Strength, Holding Above 1.0800 Mark

EUR/USD struggled to continue last Friday’s good momentum of rebounding about 50 points from below 1.0800 and encountered new supply in Asia on Monday. EUR/USD is currently trading around the 1.0825-1.0820 area, still affected by the price fluctuations of the US dollar (USD), although the downside appears to have eased.

Upbeat monthly U.S. employment data, known as non-farm payrolls, showed the U.S. economy added 303,000 jobs in March, beating expectations. That forced investors to scale back their bets on an eventual rate cut by the Federal Reserve in June and two more cuts in 2024. This prospect has kept U.S. Treasury yields higher, which in turn is seen as a “tailwind” for the U.S. dollar and puts some pressure on the EUR/USD currency pair.

Still, global equity markets were broadly positive on the back of easing geopolitical tensions in the Middle East, which could dampen the safe-haven dollar. Traders may also choose to wait and see ahead of key U.S. data releases this week, including the latest consumer inflation data and minutes from Wednesday’s crucial U.S. Federal Open Market Committee (FOMC) meeting. There is also a European Central Bank (ECB) meeting on Thursday which should provide some significant boost to the EUR/USD pair.

Meanwhile, rising bets on a rate cut by the European Central Bank in June, as reaffirmed by last week’s soft Eurozone consumer inflation data, are likely to continue to weigh on the euro, putting EUR/USD bulls on the defensive. Therefore, any bounce in EUR/USD closer to the 100-day simple moving average (SMA) around 1.0870 could be viewed as a wasted opportunity. Traders are now looking to German industrial production and the trade balance as well as the Eurozone Sentix investor confidence index to provide some impetus to EUR/USD.

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