EUR/USD struggling near 2-1/2 week lows, below mid-1.1700s ahead of NFP
• Notable USD demand continues to prompt fresh selling.
• Technical selling aggravates the downward pressure.
• Investors keenly await NFP report for fresh impetus.
The EUR/USD pair extended its bearish slide through the mid-European session and dropped to 2-1/2 week lows in the past hour, albeit recovered few pips thereafter.
Optimism over a major US tax reform plan and passage of the funding bill to avert a government shutdown continued underpinning the US Dollar and has been one of the key factors weighing on the major.
Meanwhile, the incoming US labor market data, including the latest ADP report on private sector employment and initial jobless claims remained supportive for an eventual Fed rate hike move at next week's meeting.
Hence, a goodish pickup in the US Treasury bond yields provided an additional boost to the greenback and further collaborated to the pair's slide below mid-1.1700s, marking its lowest level since Nov. 22.
Today's downfall could also be attributed to some fresh technical selling, especially after yesterday's decisive close below 100-day SMA and a short-term descending trend-channel. A subsequent break below 50-day SMA support, near the 1.1760-55 region, added to the bearish bias and aggravated downward pressure on Friday.
The selling interest seems to have receded, at least for the time being, as investors now look forward to the keenly watched US monthly jobs data (NFP) for fresh impetus.
Technical levels to watch
The bearish trajectory now seems more likely to get extended towards the 1.1700 handle, below which the pair is likely to head towards testing 1.1665-60 horizontal support.
On the upside, 1.1750-55 zone (50-day SMA) now becomes immediate resistance, which if cleared might trigger a short-covering bounce but is likely to be capped near the 1.1795-1.1800 region.