EUR/USD extended lower in early trading on Tuesday and is on track to close a fifth consecutive session in the red. However, the pair is seen holding above a well-respected support level that may lead to a near-term bounce.

The currency pair posted a high just above the 1.1800 handle ahead of last week's Fed meeting and has been moving lower since then. Last week's decline led to a bearish engulfing candle print on a weekly chart, which suggests that a reversal has taken place from the earlier bullish trend. In addition the bearish candlestick pattern, the exchange rate briefly broke below the September low earlier today, likely triggering some stops in the process.

The drop below September lows was brief, and buyers appeared in the European session to lift the pair back above support at 1.1539. This level has seen buyers resurface several times since the initial test in late May. Although there was a break below it in August, which led to a drop to fresh yearly lows at 1.1300, it can be reasonably argued that the pair remains within a range as long as it holds above 1.1539.

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Similar to EUR/USD, the inversely correlated U.S. dollar index (DXY) is seen pulling back from major resistance. DXY touched the September high of 95.74 at the European open and saw sellers push the index lower. The equivalent of 1.1539 in EUR/USD falls at 95.53, and today's daily close in relation to that level will be important for a near-term bias.

In the early week, the single currency is the weakest among the majors, while the Canadian dollar has led the group. The loonie received a lift on Friday from strong GDP figures and gapped higher against its counterparts at the open this week after a tri-lateral trade agreement was reached with the United States and Mexico.

In terms of economic data, this week's highlight will be the U.S. jobs report, scheduled for release on Friday. The average hourly earnings component of the report has been the focus ever since the U.S. economy started nearing full employment. This week, the measure should reveal if a new trend is developing. Recall that last month, average hourly earnings increased by 0.4% to beat the analyst estimate for a rise of 0.2%. This figure often beats estimates, but rarely does it do so in two consecutive months. Analysts have set expectations for a rise of 0.3%, and a beat would signal upward price pressure that is likely to spur confidence in the Fed's tightening cycle.

In other markets, oil prices rallied to levels not seen in nearly four years, with WTI crude oil last seen trading slightly above $75 per barrel. The Japanese yen has been selling off aggressively as of late and had the largest positioning adjustment in the latest Commitment of Traders report as bears piled into the trade. After an impressive rally over the past three weeks, USD/JPY is seen easing lower from resistance near 114.00, a level that has held the pair lower on three attempts since May last year.

Although EUR/USD is seen declining lower with some momentum behind it, bears may be reluctant to aggressively position prior to a confirmed break, as they hope to avoid getting caught in a range. The pair has, after all, closed relatively unchanged for four consecutive months now. A break below 1.1539 could provide that confirmation, but with signs of the level holding, a bounce may materialize. Upside resistance for the exchange rate is found at 1.1622, which reflects a respected horizontal level that is within proximity of the 38.2% Fibonacci level, as measured from last week's high to today's low. Further resistance is found at 1.1705, which falls near to the 61.8% objective and also carries significance as a whole number. A sustained break below support at 1.1539 targets 1.1393, followed by the 2018 low at 1.1300.