EUR/USD flirts with 1.1800 mark, over one-week lows ahead of NFP
- EUR/USD prolonged this week’s rejection slide from the 1.1900 mark amid sustained USD buying.
- Clarida's hawkish comments, rallying US bond yields and COVID-19 jitters underpinned the buck.
- The market focus remains on the release of the US monthly jobs or the closely-watched NFP report.
The EUR/USD pair dropped to over one-week lows during the first half of the European session, with bears now looking to extend the downward momentum further below the 1.1800 mark.
Following the previous day's range-bound price action, the EUR/USD pair met with some fresh supply on Friday and extended this week's rejection slide from the 1.1900 round-figure mark. The downfall was exclusively sponsored by sustained buying around the US dollar, which remained well supported by Fed Vice Chair Richard Clarida's hawkish comments earlier this week.
Clarida noted that conditions for an interest rate hike could be met in late 2022. Adding to this, Clarida signalled a move to taper bond buying later this year or early 2022 and forced investors to bring forward the likely timing of a policy tightening. This was was evident from the ongoing strong follow-through move up in the US Treasury bond yields.
In fact, the yield on the benchmark 10-year US government bond shot back closer to 1.24%, or fresh monthly tops, which, in turn, extended some additional support to the buck. Apart from this, a softer tone around the equity markets – amid worries about the economic fallout from the fast-spreading Delta variant of the coronavirus – further underpinned the safe-haven USD.
The market focus remains on Friday's release of the closely-watched US monthly jobs data. The popularly know NFP report is expected to show that the economy added 870K new jobs in July and the unemployment rate fell to 5.7%. The data will influence expectations about the next policy move by the Fed, which will drive the USD and provide a fresh directional impetus to the EUR/USD pair.
Technical levels to watch