Euro edges down, while US NFP takes centre stage

The Euro trades slightly lower at around 1.1545 against the US Dollar.
Investors keenly await the US NFP data for July.
Weak US ADP Employment Change data has set a negative tone for the US NFP data.

Sagar Dua FXStreet

The Euro (EUR) trades marginally lower at around 1.1545 against the US Dollar (USD) during the European trading session on Friday. The major currency pair edges down as the US Dollar ticks up, while investors shift their focus to the United States (US) Nonfarm Payrolls (NFP) data release on Friday.

At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades marginally higher to near 99.73. However, it is still close to its two-day low of 99.63.

Investors will closely track the US NFP data as it will influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook.

The US NFP report is expected to show that the economy created 80K fresh jobs in July, higher than 57K in June. The Unemployment Rate is seen remaining steady at 4.2%. Average Hourly Earnings, a key measure of wage growth, are expected to have grown steadily at 0.3% and 3.5%, monthly and yearly, respectively.

Though estimates from the FXStreet economic calendar indicate stronger NFP figures than previous ones, weaker-than-expected ADP Employment Change data for July has established a cautious backdrop for official employment.

On Wednesday, ADP reported that the private sector hired 44K new workers, lower than estimates of 70K and the prior release of 98K.

Meanwhile, the Euro trades broadly calm as investors seek fresh cues regarding the European Central Bank’s (ECB) monetary policy outlook.

EUR/USD technical analysis

In the daily chart, EUR/USD trades at 1.1540. The pair is holding above the 20-day exponential moving average (EMA) at 1.1470, but wobbles near the downtrend resistance line at around 1.1537, which together suggests a bullish near-term bias. The Relative Strength Index (14) at 61.37 stays in positive territory but below overbought conditions, hinting that upside momentum remains constructive without yet looking stretched.

On the downside, initial support is seen at the 20-day EMA at 1.1470. Looking up, the pair might attempt to extend the advance towards the May 29 high at 1.1686 if it manages to stabilize above the downward-sloping trendline at around 1.1537.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Economic Indicator

ADP Employment Change

The ADP Employment Change is a gauge of employment in the private sector released by the largest payroll processor in the US, Automatic Data Processing Inc. It measures the change in the number of people privately employed in the US. Generally speaking, a rise in the indicator has positive implications for consumer spending and is stimulative of economic growth. So a high reading is traditionally seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

Traders often consider employment figures from ADP, America’s largest payrolls provider, report as the harbinger of the Bureau of Labor Statistics release on Nonfarm Payrolls (usually published two days later), because of the correlation between the two. The overlaying of both series is quite high, but on individual months, the discrepancy can be substantial. Another reason FX traders follow this report is the same as with the NFP – a persistent vigorous growth in employment figures increases inflationary pressures, and with it, the likelihood that the Fed will raise interest rates. Actual figures beating consensus tend to be USD bullish.

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

AUD/USD sticks to neutral bias above 0.7100 amid cautious markets

AUD/USD holds steady above 0.7100 in the Asian session on Monday as the US Dollar stalls its modest pullback from the highest level since late July amid persistent geopolitical uncertainties. The PBOC status quo on Loan Prime Rates also weighs on the Aussie. However, bets on another RBA rate hike continue to underpin the Australian Dollar ahead of the Trump-Xi Summit.

USD/JPY eases below 157.00 amid looming intervention risks

USD/JPY is easing back below 157.00 in Asia on Monday, undermined by modest Japanese Yen strength amid looming intervention risks after Friday's BoJ rate check. A Japanese holiday also keeps traders on edge amid escalating geopolitical tensions between Russia and Ukraine and in the Middle East. As a result, the US Dollar pauses its pullback, limiting the pair's downside.

Gold remains depressed around $4,350 amid rate jitters, modest USD strength

Gold maintains its offered tone through the first half of the European session, and currently trades around $4,350, down over 0.50% for the day. The commodity, however, holds comfortably above a six-week low, touched last Wednesday as traders await further developments around the Middle East crisis and their implications for inflation. This, in turn, would influence interest rate expectations and, in turn, drive the non-yielding bullion.

Bitcoin hits $85,000 for the first time in eight months

Bitcoin price reclaims $85,000 on Monday, advancing last week’s 5% recovery toward an eight-month high. The recovery in King Crypto aligns with renewed institutional demand, with Exchange Traded Funds (ETFs) recording $433 million in inflows on Friday.

The week ahead: Fuel prices in focus as we lead up to key eco releases

Financial markets are in a strange position as we move to the final weeks of Q3, uncertainty and volatility continue to grip markets, but the oil price is falling; and European and US stocks are poised to open higher later on Monday. Market stresses are concentrated in sovereign bonds, and European and US yields had another scare late on Friday, and moved higher.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.