EUR/USD Price Tumbles to 1.13 amid Risk Aversion, Awaits US NFP

EUR/USD Price Tumbles to 1.13 amid Risk Aversion, Awaits US NFP

  • The EUR/USD pair is suspending a two-day downtrend but remains sidelined on an important day.
  • As markets prepare for a faster Fed issuance cut and an expansion of the ECB PEPP, US Treasury bond yields remain under pressure.
  • While the virus problem is escalating, China and Russia are feigning geopolitical fears to find a cure.

The EUR/USD price fell to 1.1300 ahead of the European session on Friday. As traders await major catalysts planned for today amid mixed macros and hesitation about the next move from the big central bank, the major currency pair seeks a clear direction after two straight days of downturns.

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The UK is poised to treat the Omicron coronavirus, a variant from South Africa. In addition, there were fewer fatal symptoms associated with the Covid strain than initially suspected. Additionally, the US Congress finally prevented a government shutdown until at least February and hindered market preference over the US dollar.

In contrast, the Hawk Fedspeak, led by San Francisco Federal Reserve Bank (FRB) President Mary Daley and Richmond President Thomas Barkin, fueled the Treasury’s returns the previous day. Bond sellers also benefitted from the weaker-than-expected US jobless claims reports for the week and the dismal Challenger downsizing data for November.

In November, the unemployment rate in the euro area fell, which favored the hawks at the European Central Bank. Reuters reports, however, that the regional central bank displayed a less aggressive stance during the December session.

Following talks in Washington on Thursday, the European Union and the United States, which criticized China’s conduct in the South China Strait and Taiwan, joined Beijing’s demand to lower tariffs on their goods to influence market sentiment.

As a result of these developments, 10-year US Treasury yields are gradually recovering from their 10-week low from the previous day, while S&P 500 futures are also registering an intraday decline of 0.12% at the time of publication. Moreover, the US Dollar Index (DXY) rose for the third consecutive day, rising to 96.17.

Eurozone retail sales in November and ECB President Christine Lagarde will likely entertain EUR/USD traders. Still, the focus will be on the US Employment Report and ISM Services PMI for November.

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EUR/USD price technical analysis: Bears to pounce 1.1300

eur/usd price

The EUR/USD price remains subdued around the 1.1300 mark, looking to break the level and post further losses. The price has moved below the20-period and 50-period SMAs on the 4-hour chart. Meanwhile, the average daily range is 22%, which is quite low. It seems like the pair is waiting for a catalyst. The downside targets lie at 1.1260 ahead of 1.1200. On the upside, 1.1330 and 1.1380 will be the key hurdles to overcome.

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Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.