- EUR/USD remains under pressure around the 1.1560 region.
- Persistent high US yields support the greenback ahead of data.
- US NFP for the month of September comes up next in the calendar.
EUR/USD navigates within a tight range and always in the lower end of the recent range in themed-1.1500s at the end of the week.
EUR/USD now looks to Payrolls
It seems EUR/USD has now moved into a narrow range bound theme amidst the broad-based pre-Payrolls cautiousness.
In the meantime, the pair alternates gains with losses in the 1.1550/60 range against the backdrop of a mild bias towards the greenback, which remains propped up by the march north in US yields, particularly after Republicans and Democrats agreed to extend the federal government funding until December, buying extra time to sort out the thorny debt ceiling issue.
Earlier on Friday, the trade surplus in Germany went down to €13B during last month, while the Current Account followed suit and decreased to €11.8B in the same period.
Later in the NA session, the always relevant Nonfarm Payrolls is due (500K exp.) along with the Unemployment Rate (5.1% exp.).
What to look for around EUR
EUR/USD stays under heavy pressure and the door remains wide open to extra losses in case of a positive surprise at the Payrolls event. The firmer tone in the buck along with higher US yields and bouts of risk aversion – particularly on the debt ceiling issue – continue to undermine the performance of the risk universe, while the growth outlook appears under pressure on rising speculations that the inflation could take longer to reverse the ongoing elevated levels. In addition, the likely loss of momentum in the economic recovery, as per some weakness seen in key fundamentals, also caps the upside potential in the pair.
Key events in the euro area this week: German Balance of Trade (Friday).
Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the Delta variant of the coronavirus and pace of the vaccination campaign. Probable political effervescence around the EU Recovery Fund. Investors’ shift to European equities in the wake of the pandemic could lend extra oxygen to the single currency. ECB tapering speculations.
EUR/USD levels to watch
So far, spot is up 0.15% at 1.1567 and faces the next up barrier at 1.1640 (weekly high Oct.4) followed by 1.1677 (20-day SMA) and finally 1.1755 (weekly high Sep.22). On the other hand, a break below 1.1529 (2021 low Oct.6) would target 1.1500 (round level) en route to 1.1495 (high Mar.9 2020).
