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EUR/USD stays pressured around 1.1000 after Fed, ECB plays, US NFP eyed

  • EUR/USD remains depressed after snapping two-day winning streak.
  • ECB announces 0.25% rate hike, fastens pace of APP but couldn’t defend Euro.
  • US Dollar licks Fed-induced wounds on mixed US data, banking crisis.
  • US employment data for April will be the last key catalyst of the volatile week

EUR/USD holds lower grounds near 1.1010 after failing to cheer the comparatively hawkish European Central Bank (ECB) decision than the Federal Reserve. Apart from the ECB’s failure to keep the Euro bulls on the table, after a two-day uptrend, the banking fears also weigh on the major currency pair during the early hours of Friday in Asia.

On Thursday, European Central Bank (ECB) matched market forecasts by announcing a 25 basis points (bps) increase in its benchmark rates. The ECB also announced faster dialing back of its Asset Purchase Programme (APP) to around EUR25 billion per month from July, from the current pace of EUR15 billion per month. In return for a smaller rate hike, the ECB chose to remain hawkish and shut the door for a rate hike pause while saying, “Inflation outlook continues to be too high for too long." Following the Interest Rate Decision, ECB President Christine Lagarde said, "We are not Fed-dependent in rate decisions, we can tighten if the Fed pauses."

On the other hand, the US Goods and Services Trade Balance improved to $-64.2B from $-70.6B prior and $-63.3B market forecast. Further, Initial Jobless Claims edge higher to 242K for the week ended on April 28 versus 240K expected and 229K previous readings.

More importantly, preliminary readings of Nonfarm Productivity and Unit Labor Cost for the first quarter (Q1) of 2023 came in mixed. That said, Nonfarm Productivity dropped to -2.7% in Q1 from 1.6% prior and -1.8% market forecasts whereas the Unit Labor Cost jumped to 6.3% versus 5.5% expected and 3.3% prior.

It’s worth noting that the Fed’s hints for policy pivot called the US Dollar bears despite the rate hike of 25 basis points.

Elsewhere, bank fears are on their roll as Western Alliance and PacWest both recently signaled jitters in the US banking sector. On the same line, the fears of the US debt ceiling expiration also weigh on the market sentiment and exert downside pressure on the EUR/USD pair due to the US dollar’s haven demand.

Amid these plays, Wall Street closed negative and the yields were pressured too but the US Dollar bounced off its weekly low.

Moving on, EUR/USD traders should pay attention to the monthly US jobs report for April to pare the weekly losses in case of a positive surprise from the headline Nonfarm Payrolls (NFP) data.

Also read: US April Nonfarm Payrolls Preview: Analyzing Gold price's reaction to NFP surprises

Technical analysis

EUR/USD stays inside a three-week-old bullish channel, currently between 1.1115 and 1.0950, with the latest bearish signals from oscillators.

Additional important levels

Overview
Today last price1.1014
Today Daily Change-0.0046
Today Daily Change %-0.42
Today daily open1.106
 
Trends
Daily SMA201.0979
Daily SMA501.0821
Daily SMA1001.0774
Daily SMA2001.0426
 
Levels
Previous Daily High1.1092
Previous Daily Low1.1
Previous Weekly High1.1095
Previous Weekly Low1.0962
Previous Monthly High1.1095
Previous Monthly Low1.0788
Daily Fibonacci 38.2%1.1057
Daily Fibonacci 61.8%1.1035
Daily Pivot Point S11.101
Daily Pivot Point S21.096
Daily Pivot Point S31.0919
Daily Pivot Point R11.1101
Daily Pivot Point R21.1142
Daily Pivot Point R31.1192

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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