EUR/USD attracts some buying for the second straight day, though lacks bullish conviction.
A positive risk tone prompts some USD profit-taking and lends some support to the major.
Elevated US bond yields should limit losses for the buck and cap the pair ahead of the NFP.
The EUR/USD pair edges higher for the second straight day on Friday and looks to build on the overnight bounce from the vicinity of the 1.0900 mark, or its lowest level since July 7. Spot prices currently trade just above mid-1.0900s, up over 0.10% for the day, and draw support from subdued US Dollar (USD) demand.
In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, remains on the defensive below a four-week high touched on Thursday amid some profit-taking ahead of the crucial US monthly employment details. The popularly known NFP report is due for release later this Friday and influence market expectations about the Federal Reserve’s (Fed) future rate-hike path. This, in turn, will play a key role in driving demand for the buck in the near term and help investors to determine the next leg of a directional move for the EUR/USD pair.
In the meantime, a generally positive tone around the US equity futures is seen undermining the safe-haven Greenback. That said, the prospects for further policy tightening by the US central bank should help limit any meaningful corrective decline. In fact, the incoming US macro data points to an extremely resilient economy and lifts expectations that Fed will have enough headroom to raise interest rates further. This keeps the yield on the benchmark 10-year US government bond elevated near its highest level since late October 2022 and should act as a tailwind for the USD.
Apart from this, speculations that the European Central Bank (ECB) may finally pause its historic hiking campaign soon, along with looming recession risks, might hold back traders from placing aggressive bullish bets around the shared currency. This might further contribute to keeping a lid on the EUR/USD pair. Hence, it will be prudent to wait for strong follow-through buying before confirming that the recent pullback from a 17-month peak set in July has run its course. Nevertheless, spot prices, for now, have managed to defend the 100-day Simple Moving Average (SMA).
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : FXStreet – https://www.fxstreet.com/news/eur-usd-trades-with-a-mild-positive-bias-lacks-bullish-conviction-ahead-of-the-us-nfp-report-202308040128