- 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.
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
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD faces decent resistance near 0.6650
AUD/USD added to the positive tone seen on Monday and rose further north of 0.6600 the figure on the back of the weaker Dollar and positive developments in the commodity complex.
EUR/USD targets the 1.0880 zone ahead of US, EMU data
EUR/USD kept the bullish bias well in place for the second session in a row, leaving behind the 1.0800 barrier and the key 200-day SMA (1.0790) prior to key data releases in the EMU and US on Wednesday.
Gold regains its poise on broad US Dollar’s weakness
Following Monday's decline, Gold stages a rebound toward $2,350 on Tuesday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.5% after April producer inflation data, allowing XAU/USD to hold its ground.
Bitcoin price defends $61K with GameStop stock resurgence likely to generate renewed appetite for risk assets
Bitcoin (BTC) price tests the patience of traders as it glides along an ascending trendline on the four-hour time frame. Meanwhile, the GameStop saga that has resurfaced after three years distracts the market.
Is the US Dollar headed for a crash?
Ahead of the US CPI & Retail Sales report, I breakdown how to combine forex fundamentals with technicals to determine whether we've seen a US dollar top?