EUR/USD Rallies on Weak US Dollar as Market Eyes NFP Data
The EUR/USD is trading near 1.1610 against the US Dollar as the Euro gains 0.2% during the European trading session on Thursday.
This comes as the US Dollar underperforms due to multiple headwinds, including weak United States ADP Employment Change data for August and the Federal Reserve pushing back upside inflation risks.
New York Fed Bank President John Williams said that 'inflation expectations are contained', and 'recent data on price pressures has been encouraging', which could ease fears of high inflation expectations.
However, market experts believe that soft US ADP Employment Change data has set a challenging stage for the Nonfarm Payrolls (NFP) data scheduled for Friday. Brown Brothers Harriman's Elias Haddad points out that 'the correlation between monthly change in ADP private payrolls and nonfarm payrolls is weak', limiting the extent to which investors can extrapolate the ADP miss into Friday's official employment report.
The EUR/USD holds a modest bullish near-term bias as spot remains above the 20-period exponential moving average (EMA) at 1.1595, suggesting underlying demand after the recent recovery from mid-1.15s. Immediate support is seen at the 20-period EMA near 1.1595, which reinforces the 1.16 area as a short-term floor while it holds.