EUR/USD remains pressured during the risk-off markets, keeps previous day’s pullback from weekly top.USD bulls run on full steam as inflation woes renew ahead of US jobs report.
Economic growth concerns, Russia-Ukraine crisis and ECB’s divergence with Fed keep sellers hopeful.One-week-old horizontal support appears the key to further downside.
EUR/USD dribbles in a bearish court as inflation woes play their role ahead of the key US Nonfarm Payrolls (NFP), down 0.14% around 1.0520 heading into Friday’s European session.
That said, the major currency pair dropped the most in a week the previous day after the Bank of England’s (BOE) pessimistic economic forecasts triggered the US dollar’s rally due to its traditional safe-haven appeal. Although the pre-NFP anxiety and recently hawkish comments from the Head of Germany’s IFO institute seem to have challenged the pair bears of late.
“The US interest rate hike leads to an appreciation of the U.S. dollar against the euro, which increases inflationary pressure in Europe,” Ifo head Clemens Fuest said, according to an advance copy of the newspaper, published on Friday per Reuters. The news also adds, “In this respect, there is some pressure for the ECB to follow.”
Technical analysis
The EUR/USD pair’s failures to keep the post-Fed rebound beyond the short-term key SMAs join the receding bullish bias of the MACD to favor sellers. That said, the latest weakness aims for an upward sloping trend line from April 28, surrounding 1.0510, ahead of challenging the 1.0490 horizontal support comprising multiple lows marked in the last week.
Meanwhile, recovery moves may initially aim for the 50-SMA and the recent swing high, respectively around 1.0560 and 1.0640. However, EUR/USD bulls will remain cautious until witnessing a clear break of the 100-SMA, close to 1.0690 at the latest.
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