EUR/USD moves away from multi-week low, retakes 1.1300 ahead of Eurozone CPI/US NFP

EUR/USD edges higher amid some repositioning ahead of the crucial Eurozone/US macro data.
The flash Eurozone PMI might influence the Euro ahead of the closely watched US NFP report.
Any significant divergence from the expected readings might infuse volatility around the pair.

Haresh Menghani FXStreet

The EUR/USD pair attracts some buyers during the Asian session on Friday and looks to build on the intraday move up beyond the 1.1300 round-figure mark. Spot prices, for now, seem to have snapped a three-day losing streak to over a two-week low, around the 1.1265 zone touched on Thursday, amid some repositioning trade ahead of crucial economic releases from the Eurozone and the US.

The European Central Bank (ECB) officials recently warned about downside risks to Eurozone inflation. Hence, investors will keep a close eye on the flash Eurozone Consumer Price Index (CPI). Any downside surprise will reaffirm market bets for a 25 basis points (bps) interest rate cut at the July ECB meeting. This, in turn, will weigh on the shared currency and pave the way for the resumption of the EUR/USD pair's recent pullback from the 1.1575 area, or the highest level since November 2021 touched last month.

From the US, the popularly known Nonfarm Payrolls (NFP) report is expected to show that the world's largest economy added 130K new jobs in April, down sharply from the 228K reported in the previous month. The Unemployment Rate, however, is expected to hold steady at 4.2%. Nevertheless, the crucial data might provide a fresh insight into the Federal Reserve's (Fed) policy outlook, which, in turn, will influence the US Dollar (USD) price dynamics and provide some meaningful impetus to the EUR/USD pair.

In the meantime, prospects for more aggressive policy easing by the Fed fail to assist the USD to capitalize on a three-day-old move up to a multi-week top. In fact, traders ramped up their bets that the US central bank will deliver four quarter-point rate reductions by the year-end after data released this week showed that the US economy unexpectedly contracted for the first time since 2022. This, in turn, holds back the USD bulls from placing fresh bets, which, in turn, is seen acting as a tailwind for the EUR/USD pair.

Economic Indicator

Core Harmonized Index of Consumer Prices (YoY)

The Core Harmonized Index of Consumer Prices (HICP) measures changes in the prices of a representative basket of goods and services in the European Monetary Union. The HICP, – released by Eurostat on a monthly basis, is harmonized because the same methodology is used across all member states and their contribution is weighted. The YoY reading compares prices in the reference month to a year earlier. Core HICP excludes volatile components like food, energy, alcohol, and tobacco. The Core HICP is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.