EUR/USD backs away from 1.1300 ahead of NFP
- US Dollar recovers modestly on American hours, remains weak on monetary policy expectations.
- After a “dovish” ECB, attention turns to the US official employment report.
The EUR/USD pair failed again to hold on top of 1.1300 and pulled back. Near the end of the session, it is trading at 1.1270/75, up 35 pips for the day. The Euro held to some of the gains that followed the ECB meeting.
As expected, the central bank kept rates unchanged. “The ECB reinforced its dovish tone by taken more accommodative decisions than expected. Forward guidance was delayed for six months, from the end of 2019 to mid-2020. Although this delay was expected, the decision was not expected as early as today,” wrote BBVA analysts. Draghi mentioned the central bank could cut rates or even restart the purchase program if the outlook deteriorates. BBVA analysts added that the Euro appreciated “suggesting markets view was far more dovish than the ECB does -markets implied probability of a depo cut by April 2020 were placed at 66% before the ECB meeting.”
On Friday, the key economic report will be the US official employment report. Non-farm payrolls are expected to rise by 185K. Data could become more relevant for traders taking into account rising expectation about a potential rate cut from the Federal Reserve. “A downside miss to NFP would do little favors for the broad USD. The narrative lies on the prospects of Fed rate cuts but also in the fact that US economy looks much less exceptional this year compared to last. Weak US data should benefit market sentiment, especially if it dovetails with a weaker USD and stronger global equities”, explained TDS analysts.
Failure above 1.1300, supported on top of 1.1200
Ahead of the critical employment data, the greenback looks weak across the board but it managed to keep key technical levels against majors. In the case of EUR/USD, the pair traded above 1.1300 again today but failed to hold and pulled back. The tone is still bullish in the short-term but a consolidation on top of seems needed to clear the way to more gain. On the flip side, the key support could be seen around 1.1190/1.1200, a horizontal range that contains the 20-day moving average.
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
