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Mar 09 - 05:55 AM

EUR/USD - COMMENT-EUR/USD May Gravitate Towards 1.0750 After NFP Data

By Jeremy Boulton  —  Mar 09 - 03:50 AM

Although comments from the Federal Reserve Governor have shaken financial markets this week, they have not done much for the technical or fundamental situations governing EUR/USD which remain fairly well balanced suggesting the pair may head towards neutral ground that is roughly 1.0750.

Should the U.S. jobs report for February meet expectations, or fall fairly close to them, which is more likely than another big surprise, as was seen with January's data, the post-data reaction may be muted.

If so, pressure upon EUR/USD which has traded towards the lower-end of the current 1.05-1.10 range in advance of Friday's report should be relieved, allowing for a modest bounce.
There is additional cause for this as the daily Ichimoku cloud twists around 1.0750 at the end of March, and twists often attract.

From a fundamental perspective, the rise in expectations for U.S. interest rates this week has merely balanced similar changes expected for eurozone rates that narrowed differentials, helping to lift EUR/USD.

The interest rate gap looks set to hold around 2% favour dollar limiting upside potential, as will the large amount of betting on a EUR/USD rise.
These factors could drag the current 1.05-1.10 range down in time, but likely only after an initial reversion to neutral ground around 1.0750.

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Refinitiv IFR Research/Market Commentary


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