Following the disappointing non-farm payrolls report Stateside released on Friday, the US dollar has been pushed lower, posting losses against most of its peers.
The US economy created a mere 74,000 jobs last month, while analysts were expecting a reading of around 200,000.
There is a lack of Eurozone data to be released this week and, as analysts at Danske Bank note, the market will continue to scrutinise the labour-market report from Friday while some further upside for EUR/USD is likely.
‘Note that strong technical resistance in EUR/USD is not seen before 1.3776 – the January 2nd high,’ they said.
According to José María Rodríguez, Technical Analyst at fxmania, the weakness seen in the EUR/USD during past weeks is ‘part of a consolidation phase inside a mid- to long-term bullish path’.
As a matter of fact, most analysts believe that the mid-term bullish bias hasn’t changed for the currency cross.
Karen Jones, Technical Analyst at Commerzbank noted that EUR/USD continues to rebound strongly from cloud support at 1.3564/55. ‘This is the third time it has held and we remain unable to rule out a corrective rebound into the 1.3740 area, where we should see the rally fail,’ she said.
Kathy Lien, Managing Director at BK Asset management, says to look at the fundamentals to forecast the USD trend for this week: ‘With US retail sales, inflation, manufacturing and confidence reports scheduled for release, it should be another busy week for the greenback,’ she said.
Lien believes that if consumer spending slows as much as economists expect – they are looking for a 0.1% rise in December versus 0.7% in November – the dollar could extend its losses, driving EUR/USD above 1.3750.
However, she also said it was important to note that when the Fed reduces asset purchases again, the European Central Bank’s dovish bias will come back into focus.