- EUR/USD ticks lower on Friday and erodes a part of the overnight recovery gains.
- Rebounding US bond yields revive the USD demand and exert pressure on the pair.
- Fed rate cut bets could cap the buck and lend support ahead of the US NFP report.
The EUR/USD pair struggles to capitalize on the previous day's modest bounce from the vicinity of mid-1.0700s, or over a three-week low and trades with a mild negative bias on Friday. Spot prices remain depressed below the 1.0800 mark heading into the European session, though lack follow-through selling as traders keenly await the release of the closely-watched US monthly employment details.
The popularly known Nonfarm Payrolls (NFP) report will be looked upon for more cues that the historically tight labor market is loosening, which will reaffirm dovish Federal Reserve (Fed) expectations. Market participants now seem convinced that the US central bank is done with its policy-tightening campaign and are now pricing in a greater chance of a 25 bps rate cut as early as March 2024. Hence, the crucial data will play a key role in influencing the Fed's policy outlook, which, in turn, will drive the USD demand and provide some meaningful impetus to the EUR/USD pair.
In the run-up to the key data risk, a further recovery in the US Treasury bond yields assists the US Dollar (USD) to attract some buyers and stall the overnight pullback from a two-week high. This, along with the recent dovish rhetoric by European Central Bank (ECB) officials, is seen exerting some pressure on the EUR/USD pair. In fact, ECB board member Isabel Schnabel earlier this week said that further interest rate increases might no longer be necessary due to a significant decrease in inflation. This might continue to undermine the shared currency and cap the upside for the major.
From a technical perspective, the overnight failure near a technically significant 200-day Simple Moving Average (SMA) support breakpoint, now turned resistance, favours bearish traders. That said, it will be prudent to wait for a sustained break below the 100-day SMA, currently around the 1.0765-1.0760 area, before positioning for an extension of the EUR/USD pair's recent sharp pullback from the 1.1015 area, or the highest level since August touched last month. Nevertheless, spot prices remain on track to register losses for the second successive week.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD bounces off 1.1300, Dollar turns red
After bottoming out near the 1.1300 region, EUR/USD now regains upside traction and advances to the 1.1370 area on the back of the ongoing knee-jerk in the US Dollar. Meanwhile, market participants continue to closely follow news surrounding the US-China trade war.
GBP/USD regains pace, retargets 1.3200
The now offered stance in the Greenback lends extra support to GBP/USD and sends the pair back to the vicinity of the 1.3200 hurdle, or multi-day highs, amid a generalised better tone in the risk-linked universe on Monday.
Gold trades with marked losses near $2,200
Gold seems to have met some daily contention around the $3,200 zone on Monday, coming under renewed downside pressure after hitting record highs near $3,250 earlier in the day, always amid alleviated trade concerns. Declining US yields, in the meantime, should keep the downside contained somehow.
Six Fundamentals for the Week: Tariffs, US Retail Sales and ECB stand out Premium
"Nobody is off the hook" – these words by US President Donald Trump keep markets focused on tariff policy. However, some hard data and the European Central Bank (ECB) decision will also keep things busy ahead of Good Friday.
Is a recession looming?
Wall Street skyrockets after Trump announces tariff delay. But gains remain limited as Trade War with China continues. Recession odds have eased, but investors remain fearful. The worst may not be over, deeper market wounds still possible.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.