(Eren Sengezer – FXStreet)
– EURUSD has started to erase its weekly losses early Friday.
– The pair faces strong resistance area at around 0.9820.
– A disappointing US jobs report could weigh on the US Dollar.
EURUSD has gathered recovery momentum and advanced toward 0.9800 in the early European morning on Friday. Later in the day, the October jobs report from the US is likely to impact the US Dollar’s (USD) performance against its rivals in a significant way and drive the pair’s action ahead of the weekend.
The sharp upsurge witnessed in the EURGBP cross on Thursday showed that the Euro (EUR) managed to capture some of the capital outflows out of the British pound (GBP). The Bank of England (BOE) said the peak rate is likely to be lower than 5.2% priced into markets and investors assessed that comment as a sign of a less aggressive tightening stance.
European Central Bank (ECB) President Christine Lagarde said on Thursday that they have to take policy action with inflation remaining too high. Lagarde further added that they have to be attentive to spill-overs from the Federal Reserve’s policy and take the exchange rate into account in inflation projections.
Meanwhile, the US Dollar is losing strength on Friday amid an improving market mood. US stock index futures are up between 0.4% and 0.9% in the European session, pointing to a positive opening in Wall Street.
The US Bureau of Labor Statistics will release the October jobs report later in the day. Nonfarm Payrolls are forecast to rise by 200,000 following September’s better-than-expected increase of 263,000. On Thursday, the Employment Index component of the ISM’s Services PMI survey came in at 49.1, pointing to a contraction in service sector employment. In case NFP misses analysts’ forecasts by a wide margin, the USD is likely to have a hard time finding demand and open the door for an extended rebound in EURUSD. On the other hand, an upbeat labour market report should help the US Dollar regather its strength and force the pair to end the week on the backfoot.
EURUSD Technical Analysis
EURUSD is facing interim resistance at 0.9800 (static level, psychological level) ahead of 0.9820 (200-period SMA on the four-hour chart, descending trend line). A four-hour close above the latter could be seen as a bullish sign and attract buyers. In case the Relative Strength Index (RSI) indicator rises above 50 on such development, the pair could extend its recovery toward 0.9860 (100-period SMA) and 0.9900 (psychological level).
On the downside, near-term support seems to have formed at 0.9740 (static level) before 0.9700 (psychological level, static level) and 0.9630 (Oct. 13 low).