EUR/USD trades with modest gains above mid-1.0900s ahead of Eurozone CPI, US NFP

EUR/USD attracts buyers for the second straight day and draws support from a combination of factors.
Reduced bets for more aggressive ECB easing in 2024 underpin the Euro and subdued USD demand.
Diminishing odds for multiple Fed rate cuts to limit the USD downside and cap gains for the major.
Traders might also prefer to wait on the sidelines ahead of the Eurozone CPI and the US NFP report.

Haresh Menghani FXStreet

The EUR/USD pair trades with a positive bias for the second successive day on Friday, albeit lacks follow-through and remains confined in the previous day's broader trading range during the Asian session. Spot prices currently hover above mid-1.0900s as traders keenly await important macro data from the Eurozone and the United States (US) for some meaningful impetus.

The flash inflation figures for the the Eurozone are due for release at 10:00 GMT and will be followed by the crucial US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) later during the early North American session. The crucial data will play a key role in influencing market expectations about the next policy moves by the European Central Bank (ECB) and the Federal Reserve (Fed), which, in turn, should determine the near-term trajectory for the EUR/USD pair.

Heading into the key data risks, the shared currency is supported by an unexpected upward revision of the Eurozone PMIs on Thursday, which forced investors to pare their bets for more aggressive rate cuts by the ECB. In fact, money markets are pricing 156 basis points (bps) of easing from the ECB this year, about 10 bps less than on Wednesday. This, along with subdued US Dollar (USD) price action, is seen acting as a tailwind for the EUR/USD pair on the last trading day of the week.

The downside for the buck, however, remains cushioned in the wake of reduced bets for multiple and early interest rate cuts by the Federal Reserve in 2024, especially after Thursday's upbeat US labor market report. This remains supportive of elevated US Treasury bond yields. Apart from this, the prevalent risk-off mood could further benefit the Greenback's relative safe-haven status and hold back traders from placing aggressive bullish bets around the EUR/USD pair.

Hence, it will be prudent to wait for strong follow-through buying before confirming that the currency pair's recent corrective slide from the 1.1135-1.1140 area, or a five-month high touched in December has run its course. Nevertheless, the EUR/USD pair remains on track to register heavy losses for the first week in the previous four.

Technical levels to watch

EUR/USD

Overview
Today last price	1.0953
Today Daily Change	0.0004
Today Daily Change %	0.04
Today daily open	1.0949

Trends
Daily SMA20	1.0953
Daily SMA50	1.0857
Daily SMA100	1.0762
Daily SMA200	1.0846

Levels
Previous Daily High	1.0972
Previous Daily Low	1.0916
Previous Weekly High	1.114
Previous Weekly Low	1.1009
Previous Monthly High	1.114
Previous Monthly Low	1.0724
Daily Fibonacci 38.2%	1.0951
Daily Fibonacci 61.8%	1.0937
Daily Pivot Point S1	1.0919
Daily Pivot Point S2	1.0889
Daily Pivot Point S3	1.0863
Daily Pivot Point R1	1.0976
Daily Pivot Point R2	1.1002
Daily Pivot Point R3	1.1032

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

AUD/USD gains traction near 0.7100 as the post-Fed USD rally pauses

AUD/USD finds fresh buyers and retakes 0.7100 in the Asian session on Thursday as the US Dollar pauses its hawkish Fed-inspired rally to its highest level since late July. However, RBA rate-hike bets and hopes for US-Iran diplomatic efforts lift risk sentiment and support the risk-sensitive Australian Dollar and the major.

USD/JPY reverses a dip below 156.00 as focus shifts to BoJ

USD/JPY is reversing a brief dip below 156.00 in the Asian session on Thursday, looking to snap a three-day winning streak to a nearly two-week top set the previous day. The US Dollar pauses following the post-Fed rally to seven-week highs, while a more hawkish repricing of the BoJ's policy normalization path supports the Japanese Yen. This keeps the pair's upside limited, with the focus now shifting to the BoJ policy decision due on Friday.

Gold: Upside appears capped by $4,400

Gold climbs sharply and clinches fresh weekly peaks on Thursday, although the bull run seems to have met some initial hurdle around the $4,400 zone per troy ounce. The yellow metal’s rebound reverses three daily declines in a row and follows the modest retracement in the US Dollar as well as another negative performance of crude oil prices.

BoE recap: A cautious stance amid rising inflation risks

The Bank of England left Bank Rate unchanged at 3.75% but delivered a distinctly hawkish message as its inflation outlook deteriorated sharply.

One hike down, more to come? The Fed’s new rate path says yes

The Federal Reserve (Fed) raised its Fed Fund Target Range (FFTR) range by 25 basis points to 3.75%-4.00% in a unanimous decision, saying the move would support a timelier return to its 2% inflation goal.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.