EUR/USD trades quietly around mid-1.18's, up 50-pips on day

After touching its fresh 32-month top at 1.1910 in the NA session, the EUR/USD pair started to consolidate its daily earnings and has been moving in a very tight range around mid-18s in the last couple of hours. As of writing, the pair was trading at 1.1856, gaining 0.47%.

Today's data from the U.S. showed that the private sector employment increased by 178,000 jobs on a monthly basis in July and failed to meet the market consensus of 185,000. However, the fact that the June's data was revised up to 191,000 from 158,000 helped the greenback keep its footing in the early trading hours of the American session. Nevertheless, investors found another opportunity to sell more US dollars after Cleveland Fed President Loretta Mester's remarks failed to provide any reasons to return to the greenback.

• US Dollar Index tumbles to 92.35, fresh 1-year low

Mester repeated statements from the July FOMC meeting as she argued that the softness in inflation was due to temporary factors and that it was necessary not to over-react and assess the data before the September meeting. Regarding the balance sheet reduction, Mester said that she was expecting it to start relatively soon but added that there would be no significant impacts on the markets in the short-term.

• Fed's Mester: Factors in place for rise in US inflation
• Fed's Mester: May take couple months to see uptick in U.S. prices

On Thursday, the economic calendar will feature more PMI data from Germany and the euro area, but they are likely to be ignored ahead of the BoE meeting. Although the BoE is not expected to make any changes to the policy rate or the asset purchase facility, the voting outcome could impact the demand for the cable. If three members of the Monetary Policy Committee (MPC) vote for a rate hike despite the recent dismal data from the U.K., cable could gather strength against its rivals. A sharp fall in EUR/GBP could also weigh on the EUR/USD via the correlation.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, writes, "the undeniable upward momentum persists heading into the Asian opening, as in the 4 hours chart, the 20 SMA continues leading the way higher, providing a dynamic support now at 1.1800, whilst technical indicators accelerated north, entering overbought territory and at fresh weekly highs. The market may enter in wait-and-see mode on Thursday after the release of services and composite PMIs in the EU and the US and ahead of the US Nonfarm Payroll report, with dips still seen as buying opportunities."

According to the analyst, the pair could face technical resistances at 1.1910, 1.1950 and 1.1990 while supports align at 1.1845, 1.1800 and 1.1765. 

• EUR/USD: bull trend remains well-entrenched across all time frames - Scotiabank