• Eurozone manufacturing sector continues to lose momentum in January.
  • Greenback fails to take advantage of the NFP data.
  • EUR/USD remains on track to post gains for the week

The EUR/USD pair continued to push higher in the NA session and touched a fresh daily high of 1.1488. With the trading volume thinning out toward the weekend, the pair started to consolidate its daily gains and was last seen adding 0.25% on a daily basis at 1.1473.

Earlier today, the IHS Markit reported that the Manufacturing PMI for the eurozone came in at 50.5 in January's final reading as expected while the same data slumped to 49.7 in Germany. Despite the disappointing data, however, the broad-based USD weakness didn't allow the pair to turn south.

In the early NA session, the U.S. Bureau of Labor Statistics reported that the nonfarm payrolls in January increased by 304,000 compared to the market expectation of 165,000. The details of the publication showed that the unemployment rate rose to 4% and the wage inflation ticked down to 3.2% on a yearly basis. The US Dollar Index fluctuated wildly as investors assessed the data and settled in the negative territory ahead of the PMI data.

Both the ISM and the Markit Manufacturing today revealed that the business activity in the manufacturing sector in the U.S. expanded at a more robust pace than expected in January. Although the PMI data helped the DXY advance to its session highs one more time, the index struggled to preserve its momentum and was last down 0.04% on the day at 95.50.

While speaking at an event organised by Texas Lyceum in Austin, Dallas Fed President Robert Kaplan argued that the Fed should hold off on further rate increases at least through June and added that pausing was the right thing to do in the current environment to remind investors of the FOMC's latest dovish shift in its monetary policy outlook.

Technical outlook by FXStreet Chief Analyst Valeria Bednarik

The pair is finishing a second consecutive week with gains, around 1.1460, a strong static level and the 61.8% retracement of the January decline. Still unclear whether it would be able to break above it, the weekly chart is offering an encouraging perspective, as the pair is above is closing above its 20 SMA for the first time since last September, while technical indicators offer bullish slopes, the Momentum entering positive territory and the RSI at around 49, skewing the risk to the upside without confirming it.

In the daily chart, technical readings offer a neutral-to-bullish stance, with the pair above the 20 and 100 DMA, and indicators flat around their midlines. In this last time frame, the 200 DMA maintains a strong bearish slope above the current level and around January's high of 1.1569, making of the level a major resistance in the case the pair manages to extend its latest gains beyond 1.1520.  The positive momentum could fade if the pair falls below 1.1425, the 50% retracement of the mentioned decline, with next supports coming at 1.1390 and 1.1350.

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