EUR/USD remains stuck in tight range below 1.18 handle, NFP eyed
- EUR/USD on course to third straight negative daily close.
- DXY consolidates daily gains above mid-93s.
- Friday's NFP data is likely to be the next catalyst.
After closing the previous day below the 1.18 mark, where the 100-DMA is sitting, the EUR/USD struggled to make a meaningful recovery on Thursday and fluctuated in a narrow 30-pip range. As of writing, the pair was trading at 1.1794, virtually unchanged on the day.
Weekly initial claims drop, NFP eyed
The data released by the US Department of Labor on Thursday revealed that initial weekly jobless claims decreased by 2K to 236K in the week ending December 2, beating the market expectation of 240K. Commenting on the data, “layoffs on the part of corporations are few and far between as good help is hard to find this far along in one of the longest economic expansions in the record books,” Chris Rupkey, chief economist at MUFG in New York., told Reuters. The US Dollar Index edged higher to its best level in nearly two weeks at 93.78 but failed to preserve its bullish momentum amid a lack of significant fundamental drivers. At the moment, the index is at 93.62, up 0.1% on the day.
Earlier in the day, the data from the euro area showed that the real GDP grew by 0.6% on a quarterly basis in the third quarter as widely expected and didn't receive any reactions from the market.
On Friday, the focus will be on the nonfarm payroll report from the United States. Although a December rate hike is already priced in the markets, a postiive reading, especially in the wage inflation figures, could provide an additional boost to the greenback as it would ramp up the expectations of the Fed going for three more rate hikes in 2018 rather than two. "A rebound in wage growth would be another sign that the now extremely tight job market is continuing to exert upward pressure on pay. That supports the broader view of the Federal Reserve that the recent dip in inflation is 'transitory'," ING analysts argued in a recent report.
Valeria Bednarik, American Chief Analyst at FXStreet, writes, "in the 4 hours chart, the price remains below its 20 and 100 SMAs, with the shortest crossing below the largest, also below the 61.8% retracement of its latest rally at 1.1800, the immediate resistance. Technical indicators in the mentioned chart held within negative territory, but lost their bearish strength, amid the limited intraday range. Nevertheless, the risk remains towards the downside with 1.1750 being now the immediate support ahead of the 1.1720 price zone."
According to the analyst, supports could be seen at 1.1765, 1.1720, and 1.1690, while near-term resistances align at 1.1800, 1.1830, and 1.1860.