EUR/USD stays pressured at multi-year low around 1.0150 ahead of US NFP

  • EUR/USD holds lower grounds at 20-year bottom after five-day downtrend.
  • Downbeat German/Eurozone data, unimpressive ECB Meeting Accounts favor sellers.
  • Recession fears, mixed US data and Fedspeak defended the USD even as market sentiment improved.
  • No major data insight ahead of US jobs report for June, risk catalysts are the key.

EUR/USD fails to cheer the improvement in the market’s mood as it remains depressed around a two-decade low, refreshed the previous day around 1.0150, during Friday’s initial Asian session. In doing so the major currency pair portrays the market’s anxiety ahead of the key US Nonfarm Payrolls (NFP) data.

Market sentiment improved on Thursday as major policymakers repeated previous comments while trying to tame the recession fears. Also keeping the market hopeful were headlines concerning China and mixed data, mostly down from Eurozone and Germany.

That said, diplomats from the US and China are up for a meeting personally after the latest virtual meeting cited progress in trade talks. With this, Beijing is optimism that it can help ease the US its inflation problem by solving the supply-chain riddle, the same gained fewer accolades from the experts though.

On a different page, the upcoming earnings and recovery in the US Treasury yields also helped to improve the risk profile but failed to propel the EUR/USD prices amid louder economic pessimism in the bloc, mainly due to the energy crisis.

Talking about the data, US Initial Jobless Claims rose by 4,000 to 235,000 in the week ending July 2, versus 230,000 expected. With this, the 4-week moving average number was 232,500, up 750 from the previous week’s average. Further, the US goods and services deficit narrowed by $1.1 billion to $85.5 billion in May, marking the smallest monthly deficit in 2022.

On the other hand, German Industrial Production eased on MoM to 0.2%, while improving on YoY to -1.5% while the European Central Bank (ECB) Monetary Policy Meeting Accounts highlighted inflation fears and mentioned that some members discussed the need for higher rate hikes . Even so, the emphasis was to deliver 0.25% increase in July.

Elsewhere, ECB Governing Council member Yannis Stournaras noted on Thursday that they are not observing excessive demand in Europe, as reported by Reuters. Further, ECB policymaker and Governor of the Central Bank of Cyprus Constantinos Herodotou said that they are not targeting exchange rates while adding that they do take their impact on inflation into account.

In the case of the Fed speakers, CEO of the Federal Reserve Bank of St. Louis. James Bullard stated, per Reuters, “We’ve got a good chance at a soft landing.” Additionally, Federal Reserve Governor Christopher Waller said inflation is way too high and does not seem to be easing and the Fed has to apply a more restrictive policy.

To sum up, the recent pause in the risk-off mood isn’t a sign of improvement and fails to help the EUR/USD prices ahead of the US jobs report for June. Forecasts suggest the headline US Nonfarm Payrolls (NFP) is expected to post the smallest monthly increase in jobs since April last year, by easing to 268K from 390K for June while the Unemployment Rate is likely to stay unchanged at 3.6% for the said month.

Also read: Nonfarm Payrolls Preview: Three dollar-positive scenarios, only one negative one

Technical analysis

Unless bouncing back beyond June’s low 1.0360, EUR/USD remains vulnerable to testing 1.0000 psychological magnet. The oversold RSI conditions, however, hint at a corrective pullback.

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