EUR/USD: Upbeat US data provides support for the dollar

US employment-related data beat expectations, hinting an encouraging NFP. The dollar came under mild pressure with the encouraging news, helping EUR/USD to recover to the current 1.1830 price zone after falling to 1.1788 during European trading hours but the risk remains skewed to the downside, according to FXStreet’s Chief Analyst Valeria Bednarik.

Key quotes

“The ECB is partially responsible for the EUR’s weakness, as policymakers have been expressing their concerns about the latest euro’s appreciation, warning that further gains would weigh on exports and bring down prices. The comments surged after EUR/USD hit 1.20, which has become a line in the sand.”

“The US has just published some encouraging employment-related numbers, as Initial Jobless Claims for the week ended August 28 decreased to 881K, the lowest reading since the beginning of lockdowns back in March. Nonfarm Productivity in Q2 improved 10.1%, beating expectations, although Unit Labor Cost in the same quarter was down to 9% from12.2% in the previous quarter.”

“The 4-hour chart shows that the risk is still skewed to the downside, as the pair trades below its 20 and 100 SMA, with the shortest gaining bearish traction. The Momentum indicator, in the meantime, retains its strong bearish slope well into negative territory, while the RSI indicator has turned flat around 40.”