EUR/USD stays depressed near 1.1550 amid firmer yields, US NFP eyed
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- EUR/USD remains pressured, refreshes intraday low during four-day downtrend near yearly low.
- US Congress passes debt limit extension to early December, China returns with readiness to battle financial woes.
- US Treasury yields, DXY rise as early signals of US NFP underpin Fed tapering concerns.
- ECB Meeting Accounts, policymakers’ comments fail to favor buyers, neither the risk-on mood.
EUR/USD takes offers to refresh intraday low around 1.1550, reversing early day recovery moves heading into Friday’s European session.
The currency major pair struggled to find the clear direction the previous day amid mixed concerns while cautious sentiment ahead of the key US Nonfarm Payrolls (NFP). Also important is a speech from the European Central Bank (ECB) President Christine Lagarde.
Although brighter mood probes EUR/USD bears, firmer Treasury yields and market’s anxiety ahead of the key US jobs report back the pair sellers.
Market sentiment improves as the US Congress passes the bill favoring the debt ceiling extension by $408 billion until early December 2021. On the same line were positive headlines concerning the Sino-American relations and the People’s Bank of China’s (PBOC) readiness to keep the financial markets liquid.
Alternatively, China’s return after a week-long holiday renews chatters over the risk emanating from the dragon nation’s property sector to the financial markets. Recently, Fantasia becomes another real estate player whose bonds are banned, after Evergrande.
Also challenging the optimists is the firming of the Fed tapering woes, amid stronger early signals for the US Nonfarm Payrolls (NFP), up for publishing today. Forecasts suggest, the headline Nonfarm Payrolls (NFP) to rise by 488K versus 235K prior whereas the Unemployment Rate may ease to 5.1% versus 5.2% previous readouts.
Read: US Nonfarm Payrolls September Preview: How far will markets go when the Fed tapers?
It should be observed that the ECB Minutes Accounts and multiple policymakers from the bloc’s central bank rejected reflation fears, as well as monetary policy tightening concerns, during their public appearances on Thursday. The same weigh on the EUR/USD prices.
That said, the US Dollar Index (DXY) picks up bids tracking the US 10-year Treasury yields, up 1.8 basis points to 1.59% by the press time. Further, Wall Street marked another positive day by the end of Thursday and S&P 500 Futures follow suit at the latest.
Although the pre-NFP trading lull may keep challenging intraday moves of the EUR/USD prices ahead of the key data, a speech from the ECB President Christina Lagarde may entertain the traders if she manages to impress with hawkish details.
Technical analysis
A two-week-old falling wedge formation restricts short-term EUR/USD moves between 1.1590 and 1.1515. However, a sustained trading below the 200-SMA, surrounding 1.1745, joins firmer USD fundamentals to keep sellers hopeful to visit March 2020 peak close to 1.1495.
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