EUR/USD treads cautiously ahead of Eurozone CPI data and US jobs report
Price is trading in a 7 pips range so far today as markets settle into the usual lull before the release of US non-farm payrolls. But that’s not the only item on the agenda today that could potentially shake things up in the euro as we have the preliminary April CPI readings for the Eurozone to come in the European morning.
The bias for that is for inflationary pressures to improve, owing much to Easter seasonality. Nonetheless, a more positive reading could still help to give the euro a nudge or two higher on the day before we get to the US data release.
For EUR/USD, sellers are back in near-term control after breaking below the key hourly moving averages overnight. However, the downside is limited by the 61.8 retracement level @ 1.1170 for the time being.
So, what are the levels to watch out for in trading today?
The two key areas (yellow lines) highlighted above are 1.1150 and 1.1200. Of note, there are large expiries resting at 1.1150-55 and 1.1200-10 so I would expect any notable moves to stay anchored around these levels until the options roll off later today.
After the Fed message on Wednesday, quite frankly I don’t see much prospects for the US jobs report later to give markets with a fresh perspective of what is going on in the domestic economy. Labour market conditions remain tight and a strong headline print on non-farm payrolls isn’t going to offer us anything new. Meanwhile, wages data has been relatively decent as of late and if it comes in within expectations, it isn’t going to change the inflation outlook all too much as well.
For me, the data is more like a litmus test whereby everyone is expecting it to hold decent/solid before going about their business to wrap up the week. The only thing to be wary about is any major surprises to the downside in the data, and that’s the only thing I can see that could rattle markets before the end of today.