EUR/USD slides on Friday, suggesting upward exhaustion

US dollar strengthens on Friday amid risk aversion and higher US yields.
Positive employment report partially offset by a weaker reading of ISM Service PMI.
EUR/USD flat for the week at around 1.0700.

Matías Salord FXStreet

The EUR/USD failed to recover the 1.0750 zone and pulled back during Friday’s American session toward the 1.0700 area. It is about to end at the same level it had a week ago after the US dollar recovered strength following NFP and the ISM Service PMI.

Yields, NFP and risk aversion

The employment report in the US came in modestly above expectations, but later the ISM Service PMI showed a larger-than-expected decline. Despite the numbers, US yields rose with the 10-year reaching 2.98%, the highest level since May 18. German yields are also higher, with the 10-year at 1.27%, level not seen since 2014, ahead of the European Central Bank meeting due next week.

US stocks are falling on Friday, the Dow Jones by 1.03%, the NASDAQ by 2.57% and the S&P 500 by 2.58%. The deterioration in market sentiment is offering support to the greenback. The DXY is up 0.45%, trimming more than half of Thursday’s losses.

Technical outlook

“The EUR/USD pair is trading just below the 50% retracement of its latest slide, measured between 1.1186 and 1.0348 at 1.0770. The weekly chart shows that the pair keeps developing well below all of its moving averages, with the 20 SMA maintaining its bearish slope below the longer ones,” explained Valeria Bednarik, Chief Analysts at FXStreet. She noted the bullish potential remains limited, “although the trend may gather momentum if the pair breaks above the 61.8% retracement at 1.0855. Steady gains above the latter could mean an extension towards the critical 1.1000 figure.”

Bednarik adds technical readings in the daily chart suggest upward exhaustion. A daily close clearly above 1.0775 should strengthen the euro, opening the doors to more gains. The 20-day SMA at 1.0610 is a critical support.

Technical levels

EUR/USD

Overview
Today last price	1.0717
Today Daily Change	-0.0029
Today Daily Change %	-0.27
Today daily open	1.0746

Trends
Daily SMA20	1.0602
Daily SMA50	1.0726
Daily SMA100	1.0968
Daily SMA200	1.1239

Levels
Previous Daily High	1.075
Previous Daily Low	1.0645
Previous Weekly High	1.0765
Previous Weekly Low	1.0552
Previous Monthly High	1.0787
Previous Monthly Low	1.035
Daily Fibonacci 38.2%	1.071
Daily Fibonacci 61.8%	1.0685
Daily Pivot Point S1	1.0677
Daily Pivot Point S2	1.0608
Daily Pivot Point S3	1.0572
Daily Pivot Point R1	1.0783
Daily Pivot Point R2	1.0819
Daily Pivot Point R3	1.0888

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.

USD/JPY eyes August swing low, near 155.20 ahead of US NFP

USD/JPY retests the August monthly swing low during the Asian session on Friday as a more hawkish repricing of BoJ rate-hike bets and a suspected intervention continue to underpin the Japanese Yen. Meanwhile, the US Dollar is seen consolidating the previous day's heavy losses amid soft US bond yields, further weighing on the currency pair as traders keenly await the US NFP report.

AUD/USD consolidates above 0.7200; US NFP awaited

AUD/USD holds steady above 0.7200, near its highest level since mid-May, as bulls await the US NFP report for more cues on the Fed's policy path before placing fresh bets. Meanwhile, the recent decline in US bond yields keeps the US Dollar depressed near its lowest level in over a week and acts as a tailwind for the Aussie amid the RBA's hawkish tilt.

Gold tumbles as blockbuster US NFP lift US Dollar, Treasury yields

Gold (XAU/USD) falls sharply on Friday, snapping a two-day recovery after the US Nonfarm Payrolls (NFP) report surprised strongly to the upside. The metal briefly climbed above $4,500 on Thursday, gaining nearly 2%, but has since erased a large part of that advance.

Crypto’s $638 million buyback boom may not be as bullish as it looks

Decentralized Finance (DeFi) protocols reportedly spent $638 million to buy back their native tokens in August, up 17% from a year earlier. On the surface, the buyback trend suggests the cryptocurrency industry is maturing fast, adopting one of Wall Street’s oldest tools to bolster valuations and distribute revenue. The headline becomes less impressive once the number is opened up.

Why hawkish Bank of Japan expectations aren't enough to sustain the Japanese Yen rally

The Japanese Yen (JPY) experienced a sudden burst higher after falling back below the 160.00 psychological mark against the US Dollar (USD) earlier this week amid a more hawkish repricing of Bank of Japan (BoJ) rate hike expectations.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.