EUR/USD gains traction above 1.0540 ahead of the German Factory Orders, US NFP

• EUR/USD attracts some buyers around the mid-1.0500s on Friday.
• Germany’s trade surplus came in at €16.6 billion in August vs. €17.7 billion prior.
• US weekly Initial Jobless Claims came in below the market expectation last week.
• The US Nonfarm Payrolls will be in the spotlight on Friday.

The EUR/USD pair holds positive ground during the early Asian session on Friday. The weakening of the US Dollar (USD) and a decline in the US Treasury Yield lends some support to the major pair. However, the upside seems to be limited ahead of the release of German Factory Orders and US employment data on Friday. EUR/USD currently trades around 1.0547, up 0.02% for the day.

Economic data on Thursday revealed that Germany’s trade surplus came in at €16.6 billion in August from €17.7 billion in July, higher than the market expectation of €15.0 billion. Additionally, France’s Industrial Production for August contracted by 0.3% MoM versus a 0.5% rise prior, below the market consensus.

Despite inflation levels exceeding the target and rising concerns of a future recession or stagflation in the region, the European Central Bank (ECB) is likely to maintain the interest rate by the end of the year.

Across the pond, traders anticipate the Federal Reserve (Fed) to raise interest rates by 25 basis points (bps) for the entire year, which might lift the Greenback and act as a headwind for the EUR/USD pair. However, the US Nonfarm Payrolls due on Friday could offer some hints for the Federal Reserve (Fed).

Apart from this, the US Department of Labor showed on Thursday that US Initial Jobless Claims for the week ending on September 30 improved to 207K from the previous reading of 205K, below the market expectation of 210K. This figure indicates that labor market conditions remain tight. Additionally, the US Balance of Trade deficit was $58.3 billion, lower than the expected of $62.3 billion and the $64.7 billion recorded in July.

Looking ahead, market participants will focus on the German Factory Orders for August. On the US docket, the US Nonfarm Payrolls and the Unemployment Rate will be closely watched by traders. The Nonfarm Payrolls are expected to rise by 170K while the Unemployment Rate is estimated to decline to 3.7% from 3.8%. These figures could give a clear direction to the EUR/USD pair.