EUR / USD bottomed out on Thursday and released its first day with a gain this week. Price action opens up potential, although the US employment report today is likely to be the main driver.
Analysts expect nonfarm employment data to indicate a loss of 22 million jobs in the United States last month, roughly what the weekly jobless claims data report.
The ADP report released earlier this week showed just over 20 million jobs lost last month.
The markets have been anticipating a decline in employment of this magnitude for some time now, and the reaction will probably depend on the deviation of the figures from the analyst’s estimate.
Before the report on American employment, the president of the European Central Bank, Lagarde, should speak. The euro came under pressure earlier this week after a higher court in Germany ruled that the ECB must justify that the size of its asset purchase program is justified. In this context, his speech could trigger a certain volatility in the pairs of euros if a quantitative easing is discussed.
EUR / USD briefly traded at its lowest level since April 24 before rebounding to wipe out Wednesday’s losses.
The price action is a slight display of strength and could suggest that a week low is in place. A stronger than expected US employment report could change this outlook.
EUR / USD was last seen near 1.0833 which acted both as support and resistance in the past month. Sustained movement above level opens the way for a stress test at 1.0907.
On the other hand, failure to maintain at current levels could lead to a decline towards support at 1.0775. This level is critical on the downside as it helped keep the pair up in February, then again twice in April, on a daily closing basis.