On Friday, the EURUSD pair gains upward traction for the second consecutive day, moving farther away from a two-month low reached earlier this week. The continued US Dollar retracement decline from a three-month high reached on Wednesday propels current prices to the 1.0600 mark during the Asian session.
The risk-off mindset helps the safe-haven Dollar marginally ahead of the critical US NFP report.
A larger-than-expected increase in US Weekly Jobless Claims was interpreted as the first indicator of a deteriorating labor market. Prompting EURUSD investors to reconsider the prospect of a 50-basis point hike at the forthcoming FOMC meeting on March 21-22. This causes a dramatic decline in US Treasury bond rates, impacting on the Greenback. However, the USD bulls are unimpressed by the current risk-off mentality, as represented in the chart. by a sea of crimson in the equity markets. Fed Chair Jerome Powell’s recent hawkish statements sparked concerns about economic headwinds caused by rising borrowing prices.
Additionally, the arrival of softer Chinese macro data heightened fears of a worse global economic collapse. Which is confirmed by a further inversion of the yield curve. In fact, the spread between 2-year and 10-year Treasury rates reached a new high on Tuesday. Lashing the clearest warning sign of impending recession. This dampens investors’ demand for risky assets, but it has little effect on the safe-haven buck. It remains to be seen,
However, if the pair can capitalize on the bullish rise, as the attention remains on the publication of the closely-watched US monthly employment figures,.Which is coming on Friday. Later, during the first North American session.
The widely publicized NFP report is projected to indicate that the US economy generated 202K new jobs in February. While the unemployment rate remained unchanged at 3.4%.This, together with the most recent US consumer inflation data due out next Tuesday. Will impact the Fed’s policy outlook and boost USD demand. Apart from that, the European Central Bank (ECB) meeting on Thursday could assist define the next leg of the major’s directional move.
EURUSD Technical Outlook
Technically, this week’s bounce from around the 100-day Simple Moving Average (SMA). And subsequent strength favor optimistic traders. But, any additional upward movement is expected to encounter resistance at the 1.0665-1.0675 horizontal zone.
With some follow-through purchasing, the EUR/USD pair might be able to retake the 1.0700 round-figure mark. This is closely followed by the 50-day SMA, which is now at 1.0720 and, if convincingly passed, will lay the ground for more advances. Spot prices may then surge towards the 1.0800 level.
On the other hand, the 100-day SMA, which currently coincides with the horizontal support at 1.0530-1.0525. Should continue to defend the immediate downside. Making the EURUSD pair exposed to additional weakness below the 1.0500. Psychological level and a retest of the YTD low around the 1.0480 zone.
The negative trend might be carried further to the 1.0425 support level on the way to the 1.0400 figure.
