EUR/USD bulls flirt with 1.0250 after the biggest daily jump in two weeks, US NFP eyed

• EUR/USD grinds higher amid pre-NFP trading lull, seesaws after the biggest daily jump in a fortnight.
• Treasury yields drown US dollar amid recession risk, mixed data.
• Pre-NFP anxiety, China-linked fears add to the trading filters.

EUR/USD bulls take a breather after the heavy run, grinding higher around 1.0250 during the initial Asian session on Friday. In doing so, the major currency pair portrays the typical cautious mood ahead of the key US Nonfarm Payrolls (NFP) release. That said, the quote rose the most in 13 days amid broad US dollar weakness and firmer German data on Thursday.

German Factory Orders dropped 0.4% MoM versus -0.8% expected and -0.2% downwardly revised prior. Also adding strength to the Euro were the hopes of economic recovery in the bloc, despite the energy crisis, mainly due to the European Central Bank’s (ECB) bond-buying, per the monthly ECB Economic Bulletin.

In the case of the US, the Initial Jobless Claims rose to 260K for the week ended on July 30 versus 254K prior and 259K expected. Further, the Goods and Services Trade Balance improved to $-79.6B versus $-80.1B market consensus and $-84.9B revised prior. Despite the mixed data, the market players remained hopeful of the Fed’s aggression but that couldn’t lift the US dollar amid fears of recession. On the same line could be an absence of major instances during US House Speaker Nancy Pelosi’s Taiwan visit, despite the verbal war.

The economic slowdown woes gained momentum after the Bank of England (BOE) formally accepted the fears of recession and further hardships while Cleveland Fed President Loretta Mester said that recession risks have increased in the US.

It should be noted that China’s military drills have sparked geopolitical fears as five test missiles landed in Japan’s exclusive economic zones. This adds to the US-China tension over Taiwan and could have challenged the US dollar bears.

Against this backdrop, Wall Street closed mixed but the yields were down for the second consecutive day to 2.69% at the latest, which in turn pressured the US dollar ahead of the key data.

Moving on, the EUR/USD traders should wait for the US Nonfarm Payrolls (NFP) for July, expected 250K versus 372K prior, for clear directions as recession fears jostle with the Fed’s aggression.

Also read: Nonfarm Payrolls Preview: High expectations set deal the dollar a blow, create buying opportunity

Technical analysis

EUR/USD justified Wednesday’s bullish Doji to portray notable run-up. However, failure to cross the two-month-old resistance line on daily closing, at 1.0245 by the press time, seemed to teased the sellers to revisit the 21-DMA support surrounding 1.0165.