EUR/USD sits at a key support level ahead of US NFP data
- The EUR/USD pair declined below a key support level ahead of US NFP data.
- The pair has dropped by more than 3.4% from its highest level in May.
- Analysts expect the data to show that the economy added more than 700k jobs.
The euro (EUR/USD) has declined in the past five consecutive days as investors wait for the latest US non-farm payrolls (NFP) data. It is trading at 1.1842, which is the lowest it has been since April 6.
US NFPs ahead
The US labour market has tightened lately. On Wednesday, data released by ADP showed that the economy added more than 685k jobs in June as companies struggled to find workers.
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On Thursday, the Bureau of Labour Statistics (BLS) data revealed that the number of initial jobless claims declined to 364k last week. This was the lowest increase since the pandemic started. Additional data by Challenger showed that the number of job cuts declined to 20k in June.
It is against this backdrop that the BLS will publish the latest non-farm payrolls data today. Analysts polled by Reuters expect the data to show that the economy added more than 700k jobs in June after it added 559k in May. Still, analysts’ forecasts have been wrong in the past two consecutive months.
They also expect the average hourly earnings rose by 3.7% while the US unemployment rate declined from 5.8% to 5.7%. These numbers will help set the tone for the Fed this month.
The EUR/USD is falling a day after the Eurozone published strong economic data. The numbers revealed that the bloc’s unemployment rate declined from 8.1% in April to 7.9% in May. This figure is still higher than the US and UK unemployment rate. Further data also showed that the bloc’s manufacturing PMI rose from 63.1 to 63.4, which is a sign that the industry is doing well.
The euro is therefore falling partly because of the rising number of delta variant cases in Europe. The increase has pushed more countries like Spain and Italy to add restrictions, which could impact their recovery. Further, the EURUSD is also falling after the latest weak Eurozone inflation data.
EUR/USD technical analysis
The EURUSD pair declined to the lowest level in more than three months as the delta variant spread. The pair has moved below the 25-day and 50-day exponential moving averages (EMA). It also fell below the important support at 1.1847, which was the lowest level on June 21. Therefore, the pair may keep falling as investors target moves below 1.1800. However, a move above 1.1880 will invalidate this trend.