EUR/USD Seeks Direction As NFP Looms

The EUR/USD pair closed the day around 1.1130 after testing a daily low of 1.1086, and will likely trade in quite a limited range during the Asian session, as Chinese market will remain closed on holidays until coming Monday.

Technically, the 1 hour chart shows that the technical indicators have corrected the extreme oversold readings reached intraday, but have lost their upward strength well below their mid-lines.

In the 4 hours chart, the technical readings also favor the downside, with the technical indicators barely recovering from oversold levels, and well below its 20 SMA.

The upcoming move will depend solely on the NFP result and how the market takes it, with a break below 1.1050 most likely confirming another day of gains for the USD.

Meanwhile the ECB surprised markets with a strong dovish stance on Thursday, sending the common currency to a fresh 2-week low against the greenback. Mario Draghi expressed officers’ concerns over the economic slowdown that affects emerging countries and China.

Additionally, the ECB stuff downgraded its forecast for growth and inflation, and increased the issue share limit to 33% from previous 25%. Somehow, the ECB has let investors known that QE is not working as well as he previously announced.

In the US, weekly unemployment claims came out worse-than- expected, printing 282K for the week ending August 28, but the US trade deficit shrunk to its lowest level in five months, down to  $41.9B, while the ISM non-manufacturing PMI resulted at 59.0 in August, below previous 60.3, but above expectations of 58.1.

Considering the overall technical and fundamental outlook, buying the pair around current levels could be a good strategy if we get a bullish reversal candle on four-hour timeframe after the release of NFP.

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