EUR/USD clings to small daily gains near 1.1050, eyes on FOMC Chairman Powell

• Nonfarm payrolls in US increase by 130K to fall short of market expectation.
• Eurozone economy expands by 1.2% annually in second quarter.  
• Coming up: FOMC Chairman Powell’s speech at University of Zurich.

The EUR/USD pair closed virtually unchanged on Thursday and continues to trade in a relatively tight range on Friday despite today’s significant macroeconomic data releases. As of writing, the pair, which touched a daily low of 1.1020, was trading at 1.1045, adding 0.12% on a daily basis.

Earlier today, the data published by the Eurostat showed that the eurozone economy in the second quarter expanded by 0.2% as expected and caused the annual growth rate to tick down to 1.2% compared to market expectation of 1.1%. Other data from the euro area revealed that employment during the same period expanded by 1.2%.

Uninspiring NFP reading hurts USD

In the second half of the day, the US Bureau of Labor Statistics announced that nonfarm payrolls in August increased by 130,000 to fall short of experts’ forecast of 158,000. Although this disappointing reading put the Greenback under modest bearish pressure, the fact that wage inflation as measured by average hourly earnings rose more than expected, 0.4%, helped the US Dollar Index (DXY) limit its losses. As of writing, the DXY was down 0.1% on the day at 98.28.

Assessing the potential market reaction to the jobs data, “The USD should retreat modestly following a soft jobs number. The extent of this is limited however as focus will shift to the ECB’s decision next week,” said TD Securities analysts.

“We expect USDJPY to trade tactically lower but find support into 106.00/50 and EURUSD to meet considerable resistance in 1.1090/1.1125.”

At 16:30 GMT, FOMC Chairman Powell will be delivering a speech and is expected to touch on the monetary policy outlook ahead of the critical September 17-18 FOMC meeting.

Technical levels to watch for