EUR/USD extends post-ECB gains towards 1.1500 ahead of US NFP

EUR/USD braces for the biggest weekly gains since March 2020 with eyes on the US monthly employment data during early Friday. That said, the major currency pair refreshes a three-week high to 1.1470, up 0.35% intraday, while heading into the European session.

The quote cheers the market’s favor for ex-USD currencies, mostly the Euro and the British Pound (GBP), after the previous day’s central bank actions. Adding to the bullish impulse are the fears of downbeat US Nonfarm Payrolls (NFP), as well as mixed Fedspeak.

On Thursday, the European Central Bank (ECB) matched wide market forecasts to keep the monetary policy unchanged. However, President Christine Lagarde’s refrain to rule out the rate hike in 2022 worked as quite a hawkish shift from her December statement. On the same line was the comment stating, “Compared with our expectations in December, risks to the inflation outlook are tilted to the upside, particularly in the near term.”

Elsewhere, the US data continued to flash mixed signals ahead of the key jobs report and keep traders on the edge. US ISM Services PMI for January and Q4 Nonfarm Productivity came in strong but Factory Orders for December and Q4 Unit Labor Costs weakened the previous day.

Also, Reuters came out with the news quoting a Fed policymaker to defend the equity buyers, also backed by tech giants. “The US Federal Reserve needs to begin raising interest rates but it is too soon to say how far or fast that process will need to go to bring inflation under control, Richmond Federal Reserve President Thomas Barkin said Thursday,” per Reuters.

It should be noted that the strongest bullish bias of the options market, as per the one-month risk reversal (RR) on EUR/USD, is a measure of the spread between the call and put prices, since May 2020 also keeps the pair buyers hopeful.

Amid these plays, the US 10-year Treasury yields rose 1.8 basis points (bps) to 1.845%, bracing for the first weekly gain in three. Further, S&P 500 Futures rise 1.14% around 4,520 whereas stocks in the Asia-Pacific region are mixed of late.

Moving on, EUR/USD traders may initially react to the Eurozone Retail Sales for December, expected 5.1% YoY versus 7.8% prior, for intermediate clues ahead of the key US jobs report. Considering the downbeat forecasts for the headline US Nonfarm Payrolls (NFP), expected 150K versus 199K prior, coupled with the negative surprise from the US ADP Employment Change for January, to -301K versus +207K forecast, EUR/USD buyers remain hopeful.

Read: Nonfarm Payrolls Preview: Win-win-win for the dollar? Low expectations, weak greenback point higher

Technical analysis

EUR/USD bulls approach the key resistance around 1.1485-90, comprising tops marked since November 11, 2021. Given the bullish MACD signals and successful trading beyond the 100-DMA level of 1.1430, the major currency pair is likely to extend the upside momentum towards 1.1500. However, October 2021 low near 1.1525 will act as an extra test for the buyers.