Dollar bulls return on strong U.S. jobs report

The EURUSD pair struggles to capitalise on the previous day’s move higher and attracts fresh sellers near the 1.1435 region during the Asian session on Tuesday.

The intraday slide is sponsored by a goodish pickup in US dollar demand and dragged spot prices back below 1.1400 in early trading.

Friday’s stronger-than-expected US nonfarm payrolls (NFP) report dampened hopes for imminent Federal Reserve interest rate cuts this year. This, along with the optimism over the resumption of US-China trade talks, prompts traders to lighten their USD bearish bets, which turns out to be a key factor exerting pressure on the EURUSD pair.

However, with negotiations extending to a second day in London, traders might refrain from placing aggressive directional bets.

Furthermore, traders are still pricing in a greater chance that the US central bank will lower borrowing costs in September. This, along with concerns about the US government’s financial health, might cap further USD appreciation and act as a tailwind for the EURUSD pair.

In contrast, the European Central Bank hinted at the end of rate cuts during a meeting held last week. This could further benefit the shared currency and contribute to limiting losses for the currency pair.

Traders might also refrain from placing aggressive bets ahead of the release of US inflation figures this week.

Hence, it will be prudent to wait for some follow-through selling before positioning for an extension of the recent pullback from the vicinity of the 1.1500 psychological mark, or the highest level since April 22 touched last week.

In the absence of any relevant macro releases, either from the Eurozone or the US, the EURUSD pair remains at the mercy of the USD price dynamics.

(Source: OANDA)