Euro on hold ahead of nonfarm payrolls

The euro is flat in Friday trade. Currently, EUR/USD is trading at 1.1873, up 0.01% on the day.

Eurozone data a mixed bag

Eurozone numbers were a mix on Friday. Services PMIs for August in Germany and the eurozone continue to indicate strong expansion in the services sector (60.8 in Germany and 59.0 in the eurozone). Both releases were weaker than in July, but not enough to worry investors and weigh on the euro. The news was less positive from eurozone retail sales. The July reading pointed to a sharp decline of 2.3%, marking a 3-month low.

The euro was unmoved after today’s eurozone events, but could show some volatility after the release of the US nonfarm payrolls reports later today. The US dollar has struggled this week and the currency markets appear ready for a further dollar sell-off today. However, such a move is contingent on a soft reading from today’s nonfarm payrolls report. The consensus is around 750 thousand new jobs, and if the release is higher than expected, we could see a short squeeze on the US dollar. If the reading surprises to the downside, EUR/USD will likely push into 1.19 territory before the weekend.

The Jackson Hole Summit is behind us but the Federal Reserve remains on the minds of investors. Today’s nonfarm payrolls could play a critical role in the timeline of a Fed taper. Fed policy makers have sent a clear message to the markets that they want to see stronger job numbers before tapering, and the million-dollar question is whether today’s NFP will deliver the goods to the Fed’s satisfaction. If the answer is yes, we can expect renewed speculation about an imminent taper, perhaps as early as October. Conversely, a weak reading could result in the Fed delaying plans for a taper, perhaps until after the New Year.

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EUR/USD Technical

  • On the upside, 1.1873 remains fluid. Above, there is resistance at 1.1943
  • On the downside, there is support at 1.1834 and 1.1725

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.