EUR/USD extends recovery above 0.9900 as risk-off fades, US NFP in focus

• EUR/USD has overstepped the major hurdle of 0.9900 as the risk-off market tone has started fading away.
• The DXY is going through a tough time ahead of US NFP data.
• Weaker projections for Eurozone Retail Sales indicate a decline in retail demand.

The EUR/USD pair has crossed the immediate hurdle of 0.9900 confidently and is expected to establish above the same. The risk profile is getting cheerful now as S&P500 has rebounded firmly. Also, yields have cooled somehow as investors are shifting their focus toward the US Nonfarm Payrolls (NFP) data. The 10-year benchmark yields have slipped below 3.75%.

Meanwhile, the US dollar index (DXY) has slipped sharply to near 111.00. It seems that the DXY is facing volatility amid lower consensus for the US employment data. Escalating interest rates by the Federal Reserve (Fed) to combat the mounting inflation has trimmed employment opportunities.

The corporate has left with no other option than to postpone the capacity expansion and investment plans to avoid higher interest obligations. This is resulting in a slowdown in the job creation process.

As per the expectations, the US Nonfarm Payrolls (NFP) data will decline to 250k vs. the prior release of 315k. The jobless rate is seen as stable at 3.7%. Apart from that, the Average Hourly Earnings data will remain in focus, which is expected to trim by 10 basis points (bps) to 5.1% on an annual basis.

However, the upbeat release of the US Automatic Data Processing (ADP) payroll data on Thursday is not supporting the case for a slowdown in the recruitment process by the corporate sector. But the US NFP data is expected to display a clear picture of employment status in the US economy.

On Thursday, the eurozone bulls will dance to the tunes of Retail Sales data. According to the estimates, the economic catalyst will decline by 1.7% against the former print of 0.9%. This indicates a slowdown in the overall retail demand and the mounting price pressures are responsible for the same. Apart from that, firms in the trading bloc are facing a serious decline in operating margins due to soaring energy prices.