Euro climbs to four-day highs near 1.0550, looks at US NFP

• The Euro keeps the bid bias unchanged against the US Dollar.
• Stocks in Europe open with decent gains on Friday.
• EUR/USD rises to the 1.0550 region, or four-day peaks.
• The USD Index (DXY) recedes further and flirts with 106.30.
• Factory Orders in Germany expand in August.
• The US Nonfarm Payrolls will be the salient event across the ocean.

The Euro (EUR) is showing signs of further strength against the US Dollar (USD), motivating EUR/USD to advance to multi-day highs near 1.0550 at the end of the week.

Meanwhile, the Greenback sheds further ground and revisits the 106.30 when tracked by the USD Index (DXY) on the back of extra improvement in the sentiment surrounding the risk-associated universe, despite the tepid rebound in US yields across the curve.

In terms of monetary policy, investors now see the Federal Reserve (Fed) keeping its interest rates unchanged in the latter part of the year. At the same time, market speculation continues about the European Central Bank (ECB) potentially pausing policy adjustments, despite inflation levels surpassing the bank's target and growing concerns about a future recession or stagflation in the region.

On the euro calendar, Factory Orders in Germany expanded at a monthly 3.9% in August, while Retail Sales in Italy contracted 0.4% inter-month also in August.

In the US data space, all the attention will be on the release of September’s Nonfarm Payrolls and the Unemployment Rate. In addition, Consumer Credit Change for the month of August are also due, along with a speech by FOMC Governor Christopher Waller (permanent voter, hawk).

Daily digest market movers: Euro looks bid ahead of key US NFP

• The EUR seems to consolidate the breakout of 1.0500 vs. the USD.
• US and German attempt a mild comeback so far on Friday.
• Investors’ bets for a 25 bps rate hike by the Fed lose traction.
• Markets see the ECB pausing its hiking campaign.
• ECB’s Schnabel does not rule out a (mild?) recession.
• Market talks above FX intervention in USD/JPY appear unabated.

Technical Analysis: Euro now looks at 1.0600 and above

EUR/USD regains the smile and advances further north of 1.0500 the figure so far on Friday.

The potential resumption of selling pressure on EUR/USD may lead to a revisit of the 2023 low at 1.0448 (October 3), with the possibility of testing the significant round level of 1.0400. If this level is surpassed, it could open the door for a potential retest of the weekly lows at 1.0290 (November 30, 2022) and 1.0222 (November 30, 2022).

On the other hand, if the pair continues to gain momentum, it could target the next upside barrier at 1.0617 (September 29), followed by the critical 200-day SMA at 1.0823. Breaking beyond this level might lead to a test of the weekly high at 1.0945 (August 30), as well as the psychological threshold of 1.1000. Should the pair trespass the August peak of 1.1064 (August 10), it could encounter the weekly top of 1.1149 (July 27) and even the 2023 peak at 1.1275 (July 18).

However, it is essential to bear in mind that as long as the EUR/USD remains below the 200-day SMA, there is a possibility of further bearish pressure.