EUR/USD remains on the defensive below 1.1050, all eyes on US NFP data

• EUR/USD struggles to gain ground around 1.1035 in Friday’s early Asian session. 
• The US Services PMI came in better than expected in September. 
• The cautious mood and rising bets of another ECB rate cut weigh on the Euro.

The EUR/USD pair remains on the defensive near 1.1035 amid the stronger Greenback during the early Asian session on Friday. The cautious mood in the markets ahead of the key US economic data weighs on the major pair. All eyes will be on the release of US employment data, which is due later on Friday.

The upbeat US Services Purchasing Managers Index (PMI) released on Thursday provides some support to the US Dollar (USD). The Services PMI climbed to 54.9 in September from 51.5 in August, exceeding the market forecast of 51.7, the Institute for Supply Management (ISM) showed. 

Meanwhile, Initial Jobless Claims in the US rose by 6,000 to 225,000 in the week ending September 28. This figure followed the previous week's print of 219,000 (revised from 218,000) and came worse than the market expectation of 220,000.

Fed Chair Jerome Powell indicated this week that policymakers would likely stick with 25 basis points (bps) rate cuts going forward. The markets have priced in nearly 68.9% odds of a 25 bps Fed rate cut, while the chance of 50 bps reductions stands at 31.1%, according to the CME FedWatch Tool. 

The US Nonfarm Payrolls (NFP) on Friday could offer some hints about the US interest rate path. The US economy is estimated to see 140K job additions in September, while the Unemployment Rate is projected to hold steady at 4.2%. If the jobs report showed a weaker-than-expected outcome, this could prompt the central bank to consider cutting rates deeper, which might exert some selling pressure on the USD.

Across the pond, the European Central Bank (ECB) policymakers continue to hint that another cut could be coming in the near future. This, in turn, might undermine the Euro (EUR) against the USD. Kyle Chapman, FX analyst at Ballinger Group, noted, "Policy is far too restrictive given the tough macro environment, and a switch to consecutive rate cuts seems to be a given now that disinflation is in its late stages.