The EUR/USD after recording a fresh yearly high of 1.2011 struggled to retain the edge gained on the dovish comments by Fed officials during the recent Federal Reserve Economic Symposium. The Relative Strength Index is sustaining the downward trend in August.
EUR/USD has started September with a series of lower highs and lows even as the Fed gives more clarity regarding the changes to the statement on Longer-Run Goals and Monetary Policy Strategy. The pair might face further pullback ahead of the NFP report as the RSI renewed its August bearish tilt after a brief uptrend hit a trendline resistance.
Markets expect the NFP to show the US economy adding 1.4 million jobs in August. If the job uptick is substantial, it might help the dollar bulls as the FOMC will be under pressure to adopt less-dovish monetary policy guidance.
But, if the data prints show that the recovery will take longer, then the greenback will be under pressure as FOMC relies on non-standard tools to support the economy. The Fed wants to achieve inflation that averages two Percent overtime, and the slower growth signs could be bearish for the dollar.
The crowding behaviour in the US dollar might continue as the next Fed interest rate decision day of September 16 draws near. The retail traders are net short the EUR/USD since the latter half of May, and the current market trends would continue to affect the trading in the pair.
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