EUR/USD nears 1.0800 as EU inflation lures ECB doves, US NFP eyed

• EUR/USD holds lower grounds after falling the most in five weeks the previous day.
• Eurozone inflation halved in the last four months versus January-April period.
• US Core PCE Price Index appears positive but lacks details to ensure Fed rate hikes.
• Firmer US employment data eyed to defend higher rates and can weigh on Euro price.

EUR/USD remains depressed around 1.0845 as traders brace for the top-tier US employment details on early Friday. In doing so, the Euro pair struggles for clear directions after declining the most in five weeks the previous day.

That said, Eurozone inflation data came in mostly positive the previous day but the comparative stance on a four-month basis challenges the European Central Bank (ECB) officials’ hawkish bias.

On Thursday, Inflation in the Eurozone per the European Central Bank’s (ECB) favorite gauge, namely the Harmonized Index of Consumer Prices (HICP), rose to 0.6% MoM versus -0.1% expected and prior readings whereas the YoY figures remained reprinted 5.3% figures compared to 5.1% YoY market estimations. “Over the past four months, the average monthly increase in core HICP has fallen to 0.2% m/m, versus an average of 0.6% m/m in the first four months of this year, indicating deceleration,” said ANZ after the data.

Further, Germany’s Retail Sales for July reprints -0.8% MoM figures versus 0.3% market forecasts while the YoY outcomes appear more disappointing as it drops to -2.2% from -1.6%, compared to -1.0% expected.

Following the data, ECB Meeting Accounts turned down hopes of any surprises from the bloc’s central bank, which in turn weighed on the EUR/USD price in contrast to the hawkish comments from ECB policymaker Robert Holzmann and the neutral remarks from Isabel Schnabel.

On the other hand, the Fed’s preferred inflation gauge, namely the US Core Personal Consumption Expenditure (PCE) Price Index for August, matched market forecasts of 4.2% YoY and 0.2% MoM versus 4.1% and 0.2% respectively priors. Further, the Initial Jobless Claims dropped to 228K from 232K prior (revised) versus 235K market forecasts while the Chicago Purchasing Managers’ Index rose to 48.7 for August compared to 44.1 expected and 42.8 previous readings. Additionally, Personal Spending rose past the 0.6% expected and previous readings to 0.8% for July whereas Personal Income eased to 0.2% for the said month, from the 0.3% market forecast and prior.

Amid these plays, the US 10-year and two-year Treasury bond yields remain depressed around the lowest level in three weeks while the US stock futures dwindle after a mixed Wall Street close. With this, the EUR/USD bears are likely to struggle ahead of the data while the early details have been positive for the Euro buyers unless any major surprises from the US NFP and Unemployment Rate roll out.

Technical analysis

The EUR/USD pair’s U-turn from the 100-DMA, around 1.0925 by the press time, lures the Euro bears to again poke the 200-DMA support of around 1.0815.