The EUR/USD pair is trading lower around 1.1195 during early European hours on Friday. Markets are cautious ahead of key economic reports, including German Industrial Production, Eurozone Retail Sales, and US employment data. Safe-haven flows from a global sell-off in AI stocks are providing some support to the US dollar against the Euro. Dilin Wu, research strategist at Pepperstone, noted, "The dollar is getting some support from safe-haven demand."
The probability of a 25-basis-point interest rate hike by the Federal Reserve in December has dropped to 70.9% from 82.7% earlier in the week, following the Democrats' victory in the US midterm elections. The US Nonfarm Payrolls report is expected to show a rise of 65,000 job additions in September, with the Unemployment Rate projected to remain at 4.2%.
Deutsche Bank analysts highlighted that Eurozone inflation data for October met expectations, with headline inflation reaching a three-year high of 4.0% and core inflation steady at 2.5%. Eurozone yields retreated, with 10-year bunds falling to 3.27% and 10-year OATs dropping to 4.77%. Inflation expectations also declined, with the Euro 1-year inflation swap hitting a two-month low of 3.10% and the US 1-year inflation swap at 2.16%.
ECB President Christine Lagarde emphasized persistent inflation risks and trade uncertainties in her speech, which scored 6.2/10 on FXS Speechtracker. Lagarde's comments suggested the ECB remains cautious about easing, which is broadly supportive of the Euro. She also noted that US tariffs are unlikely to be revisited quickly, highlighting lingering trade and growth uncertainties.
Technically, EUR/USD maintains a bearish outlook below the 100-day simple moving average. The pair is capped below this key resistance level, with immediate support near 1.1132. A break below this level could open the path toward the 1.1100 psychological level and the May 12, 2025 low of 1.0951. On the upside, resistance levels include 1.1255, 1.1353, and the 100-day SMA around 1.1415.