The EUR/USD currency pair turned around its three-day losing streak on Friday, closing well above the important 1.1300 mark. Traders are rotating into US stocks as the US dollar starts its long downward path. This major movement comes just ahead of the highly anticipated US Non-Farm Payroll (NFP) report. As traders reconsider the market, the euro gains strength again showing a possible change in sentiment.
In European forex exchange, EUR/USD sunk to an early week low in value, but then extremely rebounded, gaining breath above the important thing 1.1300 mark. The extraordinary moves in this currency pair over the last couple weeks illustrate the overwhelming impact fundamental news can have on the trader’s mindset. The US Dollar’s decline has largely supported the euro’s resurgence, allowing it to regain ground that it had previously lost.
Market participants are looking very closely at the forthcoming economic reports. They are particularly sensitive to the US Non-Farm Payroll report and the EU Consumer Price Index (CPI). These reports are key because they offer the first glimpse into how hot or cold the labor market is, and the other giving inflation’s trends, respectively. The excitement around these releases usually creates a lot of volatility, which is where traders might get quick and tactical and reposition themselves.
At the same time, investors are actively taking profits which has accelerated the decline of the US Dollar. They are recalibrating their positions as they continue to wait for key economic indicators to reveal themselves. Second, as the dollar weakens, it creates an environment that allows other currencies including the euro to strengthen. For now the current market dynamics seem to indicate that traders are taking advantage of this window to re-position themselves ahead of important announcements.
Specifically on Friday, EUR/USD saw some significant strengthening above the 1.1300 figure during a quiet European trading session. This period of stability is a sign that momentum may just be turning for the pair, as it climbs higher from its recent lows. The euro and the US Dollar play a dramatic, mutually influential role. This shows just how important economic indicators are fundamental for steering perceptions of the market and creating trading plans.
Traders seem prepared for the US NFP and EU CPI releases. As they demonstrated again recently, they are conscious of how these events can rattle the currency market. This makes the NFP report of monumental significance. As the primary driver of economic performance, the strong labor market-inclusive US job growth is a particularly salient trend to focus on. Just like the EU CPI, these are crucial barometers for inflation trends within the Eurozone which in turn affects traders’ views on EUR/USD.