EUR/USD rises slightly in optimistic markets before US Nonfarm Payrolls report

• The Euro is stable but faces minor weekly losses.
• The eurozone’s final GDP shows a growth of 0.1% in the first quarter, with the annual rate adjusted from 1.4% to 1.5%.
• The US dollar could experience a drop with market attention on the upcoming soft US NFP report.

On Friday, the EUR/USD climbed above 1.1680, yet still seems set for a second consecutive week of losses. The upward revision of the eurozone’s GDP has given the euro some backing, but the US dollar remains cautious as traders await the significant non-farm payroll (NFP) figures later in the day.

Market players are anticipating a softer NFP report to reinforce hopes for Federal Reserve interest rate cuts in September. The initial unemployment claims from the US, along with ADP reports from Thursday, indicated a weakening labor market, which supports this sentiment.

Comments earlier in the week from Federal Reserve officials tended to align with this outlook. New York Fed President John Williams noted on Thursday that he expected “gradual interest rate cuts,” while Chicago Fed President Austan Goolsbee said that the September meeting was “on the table” in light of labor market concerns.

Speculation around lower US interest rates has contributed to easing a bond market crisis noted at the week’s start. In Europe, the 30-year yields for Germany and France have improved from their lows on Wednesday, but still remain relatively high.

Daily Digest Market Mover: Mild Risk Appetite Supports the Euro

• The euro might draw some support from a moderate risk-on market vibe on Friday, attempting to recover losses from earlier in the week. However, efforts to rise could be stifled as investors are cautious about selling the US dollar before the NFP report.
• Weak payroll data has led to elevated expectations for interest rate cuts last month in September, with a consensus pointing to similar trends for August. Following the 73K increase in July, private payrolls are projected to have risen by 75K.
• The US employment data released Thursday confirmed a slackening in labor market momentum. The ADP Employment Change Report indicated a 54K increase in August, well below the anticipated 65K, marking just about half of the prior month’s 106K.
• US weekly unemployment claims surged to 237K in the last week of August, the highest since June, surpassing market expectations of a 230K jump from the previous week’s 229K.
• The futures market is now almost fully reflecting expectations following the meetings on September 16th and 17th, with the CME group’s FEDWATCH tool indicating a 99.4% likelihood of a quarter-point cut, suggesting another potential reduction by the year’s end.
• In Europe, the final readings of GDP for the second quarter have confirmed a quarterly growth of 0.1%, a decline from the 0.6% seen in the previous quarter. The annual growth has been revised up from 1.4% to 1.5%, comparable to the 1.5% growth experienced in the first three months of the year.

Technical Analysis: EUR/USD The Bulls target a key resistance area between 1.1720 and 1.1740

The EUR/USD is experiencing increased bullish momentum. The 4-hour relative strength index (RSI) has risen past the 50 mark, and the MACD is indicating a bullish cross, suggesting that buyers are taking control.

Confirmation above the 1.1682 level on September 3 has provided optimism for retesting major resistance zones, currently located between 1.1720 and 1.1735.

Support levels are tracking a low of nearly 1.1630, just below the recent low seen on September 3. Further down, bearish pressure looms around the areas of August 11th, 22nd, and 27th, specifically between 1.1575 and 1.1590 — which has held as the trading range floor for the past month.

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