Today market session is favoring the Euro pair as well as U.S. labour data this week. The major pair cheered from the upbeat EU data and risk-on mood triggered the prior corrective pullback. However, a shift in the market sentiment seems to have recently weighed on the quote amid a quiet start to the key week.  The dollar found support just below last week’s peaks on Monday as renewed concerns about China’s property sector and looming U.S. labour data put investors in a cautious mood. European markets is looking to start the month after a tricky September, with concerns around inflation, where Federal Reserve tapering and rising interest rates dominated sentiment.

The risk aversion wave takes clues from China as Evergrande shares get suspended from trading in Hong Kong. However, news that an investor will acquire a 51% stake in the troubled firm’s management unit test the bears amid a week-long vacation in China. Shares in embattled developer China Evergrande 3333.HK were halted in Hong Kong without any immediate reason, rekindling market nerves about the possibility of global contagion – or at least distress in China’s property sector. Trading in the shares of Evergrande Property Services was also halted. There were no reasons given for the trading halts.

At the same time, the shares of another Chinese property developer Hopson were also suspended. Events of interest, however, include a meeting of euro zone finance ministers on Monday to discuss matters including the EU’s recovery plans, banking union and fiscal policy. Traders likewise think that it will take a lot to derail the Fed from its tapering track, but steadying Treasury yields along the curve points to some risk to the timing. The question is whether there is a number that alters the Fed’s view on tapering its bond purchases in November, and what a really weak or hot number means amid the backdrop of rising stagflation fears. If U.S. treasuries find further buyers this week into Friday’s U.S. non-farm payrolls, the dollar may go on sale this week.

Elsewhere, Biden and Yellen must also decide whether to hand a second term to Federal Reserve Chairman Jerome H. Powell, a decision which could also roil markets. For Powell and his international counterparts, the combination of slowing growth and stubborn inflation is a challenge. For now, Powell and European Central Bank President Christine Lagarde are voicing cautious optimism that inflation will ease. But economists are asking at what point transitory becomes more persistent. It’s worth noting that the hopes of US stimulus, as backed by President Joe Biden and House Speaker Nancy Pelosi joins expectations that Beijing will limit the negative fallout of the Evergrande’s default to challenge the market pessimism.

It should be observed that Friday’s upbeat Eurozone PMIs and Inflation figures joined month-start consolidation to help the EUR/USD recover from the yearly low. Besides Evergrande a Friday CNBC report which said U.S. Trade Representative Katherine Tai will announce on Monday that China is not complying with U.S.-China trade rules also provided support to the dollar, especially against the yuan. Chinese markets were closed for a holiday. Oil markets will be tracking a meeting of OPEC and non-OPEC ministers too. Unemployment figures from Spain are due out in the early part of the European session.

EUR/USD 4 Hour Chart:

Support: 1.1570 (S1), 1.1544 (S2), 1.1525 (S3).

Resistance: 1.1614 (R1), 1.1633 (R2), 1.1659 (R3).

Amidst this above catalysts the euro is on uptrend against greenback. We expect bullish trend for EUR/USD.