Forex Market Review – Euro pressured after soft PMI; US non-farm payrolls eyed

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Euro faced downside pressure during the European session, weighed by weaker than expected euro zone PMI numbers. April euro zone Services PMI fell to 46.9 from 47.9. Strong euro zone retail sales data that followed were unable to lift the single currency but provided some support. March retail sales rose 0.3 percent beating analysts expectations of 0.1 percent. Weekend elections in France and Greece are also keeping the euro heavy.

 

EURUSD opened in Europe at 1.3151 and slid to a low of 1.3119.

EURJPY opened in Europe at 105.45 and slid to 105.19 on broad euro weakness after the weak PMI data.

 

However, the main focus and driver behind euro-dollar is the upcoming key US non-farm payrolls report. Any disappointment would weigh on the dollar because this would renew speculation of Federal Reserve monetary easing. US April NFP is expected to show an increase of 170,000 jobs versus a previous 120,000. The unemployment rate is expected to remain the same at 8.2 percent.

 

Cable  has been trading in a range in the past two days. Yesterday’s soft construction PMI numbers are weighing the pound, though uncertainty on the dollar and most investors sidelined ahead of NFP is helping keep GBPUSD propped up above strong support at 1.6160.

 

The dollar held steady versus the yen above 80.12 yen, which is above the 10-week low of 79.69 yen hit on Tuesday. The pair was little changed during the last two sessions as markets await the NFP jobs numbers.   The market is largely positioned for weaker data so a downside USDJPY move won’t be as large compared to if the NFP surprises to the upside, which the initial knee-jerk reaction will significantly boost the US dollar.