- EUR/USD edges higher amid some repositioning ahead of the crucial Eurozone/US macro data releases scheduled for today.
- The flash Eurozone PMI data could significantly influence the Euro’s trajectory ahead of the closely watched US Non-Farm Payrolls (NFP) report.
- Any significant divergence from the expected economic readings has the potential to inject considerable volatility into the EUR/USD currency pair.
The EUR/USD pair is experiencing renewed buying interest during the Asian trading session on Friday, with the price action attempting to extend its intraday upward movement beyond the key psychological level of 1.1300. The spot price appears to have halted a three-day losing streak that culminated in a more than two-week low, reaching the vicinity of 1.1265 on Thursday. This recovery is likely driven by strategic repositioning by market participants in anticipation of pivotal economic data releases from both the Eurozone and the United States.
Recent communications from European Central Bank (ECB) officials have highlighted concerns regarding potential downside risks to the Eurozone’s inflation outlook. Consequently, investors will be paying close attention to the preliminary Eurozone Consumer Price Index (CPI) figures. Should the CPI data reveal a weaker-than-anticipated reading, it would likely reinforce market expectations of a 25 basis points (bps) interest rate reduction at the ECB’s July policy meeting. Such a development would exert downward pressure on the Euro, potentially paving the way for a resumption of the EUR/USD pair’s recent retreat from the 1.1575 level, which represents the highest point observed since November 2021 and was reached in the preceding month. The ECB’s monetary policy decisions are heavily data-dependent, making this CPI release a crucial indicator for future interest rate adjustments.
From the United States, the highly anticipated Nonfarm Payrolls (NFP) report is projected to indicate that the US economy added 130,000 new jobs in April. This figure represents a significant decrease from the 228,000 jobs added in the previous month, signaling a potential slowdown in employment growth. The Unemployment Rate, however, is expected to remain stable at 4.2%. This key employment data is expected to provide further insights into the Federal Reserve’s (Fed) monetary policy stance, which will, in turn, influence the valuation of the US Dollar (USD) and provide a substantial catalyst for movements in the EUR/USD exchange rate. Market participants will be scrutinizing the NFP report for clues regarding the Fed’s future course of action, particularly in light of recent inflation data and economic growth concerns. A weaker-than-expected NFP figure could prompt the Fed to adopt a more dovish approach, potentially weakening the US Dollar.
