- EUR/USD remains on the defensive between 1.1800-1.1850.
- US dollar holds firmer amid hawkish Fed expectations, covid weos.
- US NFP stands out, 21-DMA appears at risk for the currency pair.
EUR/USD is moving back and forth in an 18-pips narrow range above 1.1800 so far this Friday, as investors await the all-important US NFP data to gauge the Fed’s next policy action.
The US dollar is sitting at weekly highs above 92.30 against its main peers in lead up to the key event risk, gaining strength from the recent hawkish Fed rhetoric and expectations of strong jobs data.
The recent Fedspeak have brought forward the US central bank’s tightening as well as tapering expectations, against a backdrop of improving economic performance. The 10-year US Treasury yields rise 1% heading into the event, underpinning the dollar bids.
Further, the relentless rise in Delta covid variant cases globally spooks investors, as they scurry for safety in the greenback. Meanwhile, the euro remains weighed down by downbeat German Industrial Production data.
In the session ahead, the pre-NFP caution trading is likely to leave the major wavering in a familiar range. Upbeat US jobs data could bolster Fed’s hawkish bets, weighing negatively on the spot.
The July NFP is seen at 870K vs. 850K previous while the unemployment rate is likely to drop to 5.7%.
EUR/USD technical outlook
EUR/USD is extending its losing streak into the sixth straight day on Friday, having failed to find acceptance above 1.1900 on multiple occasions.
That said, the price is challenging the critical horizontal 21-Daily Moving Average (DMA) at 1.1825.
A US NFP blowout could yield a sustained break below the latter, exposing the July lows around mid-1.1700s.
The 14-day Relative Strength Index (RSI) points to the additional downside, as it trends below the midline.
On the flip side, if the data disappoints, then a rebound towards Thursday’s high of 1.1857 could be on the cards.
Further up, the 1.1900 threshold could come into play yet again.
EUR/USD daily chart
