- US dollar ends week with positive momentum after US employment data.
- EUR/USD drops to 1.1550 and consolidates losses, on it way to a modest weekly loss.
The EUR/USD pair dropped further during Friday’s US session on the back of a stronger US dollar. It printed a fresh 2-day low at 1.1549 and bounced modestly to the upside. Near the end of the session was hovering around 1.1560, almost 90 pips below day’s highs.
A stronger US dollar, particularly after the release of US employment data, pushed the pair to the downside. The NFP headline was slightly above expectations but the positive surprise came from an acceleration in wage growth. It sent US yields to the upside adding more strength to the greenback.ç
On a weekly basis, the euro is about to post a modest loss but it signals weakness ahead. The upside was capped by the 20-week moving average and during the week it was rejected from above 1.1630, a relevant resistance level. A confirmation below 1.1520/25, would add pressure to the downside while above, a key support is the 20-day moving average at 1.1550.
Data Ahead
Next week, in the Eurozone, the ECB meeting on Thursday is the key event. No change in monetary policy is expected but will present new projections. In the US, CPI and retail sales data are due. Also, trade tensions between the US and China will be in focus.
“Following marked growth divergence in favour of the US, we believe the relative cyclical picture is starting to shift with the improved economic data in the euro area. Short term, we think the relative-rate support for USD and EUR political risks will dominate, leaving EUR/USD in the sub-1.15 range but we see the cross staying above 1.10. At yearend, when the relative cyclical picture may shift in favour of the euro area and the euro capital outflows of recent years are fading when the first ECB hike draws closer, we think
EUR/USD will move higher again”, wrote analyst at Danske Bank.
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