The euro is drifting in Friday trade. In the North American session, EUR/USD is trading at 1.1853, up 0.02% on the day.
German data raises concerns
Germany, the largest economy in the eurozone continues to limp, which is bad news for the entire bloc. Earlier in the week, German retail sales, declined by 0.9% in July, marking back-to-back declines. On Friday, eurozone retail sales declined by 1.3%, after a gain of 5.7% beforehand. The German services and manufacturing sectors also pointed lower. The Services PMI dropped to 52.5, down from 55.6 in the previous release. If this downward trend continues, the index could quickly find itself below the 50-level, which points to contraction. As well, Factory Orders were weaker than expected, at 2.8%. Analysts had projected a gain of 5.1%. This marked a huge drop from the previous reading of 27.9%. The euro did not react to the weak German numbers, but if economic data continues to disappoint, the euro could find itself under pressure from sour investors.
US Nonfarm Payrolls looms
The US releases Nonfarm Payrolls later today (12:30 GMT), and a robust reading could be just the tonic to revive the ailing US dollar. The forecast for August is 1.375 million. There is cause for optimism, as US Initial Jobless Claims, which was released on Thursday, was better than expected. The indicator dropped to 886 thousand last week, lower than the estimate of 955 thousand. Still, there is some apprehension ahead of the release, following disappointing data from the ADP Nonfarm Payrolls report earlier this week. The ADP release showed that 428 thousand jobs were created in August. That was better than the July numbers, but well off the estimate of 1.25 million. If the official payroll report follows suit and falls far short of the estimate, it could dampen investor sentiment towards the US dollar.
EUR/USD has shown limited movement in the Asian and European sessions
- There is support at 1.1806, which is protecting the 1.18 level. Below, there is support at 1.1760
- The next resistance line is at 1.1882, followed by resistance at 1.1912
- The 20-day MA remains relevant, as the pair is currently touching this line
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