EUR/USD recovers some lost ground above 1.0500, German trade data eyed

• EUR/USD holds ground around 1.0505 amid the weaker USD.
• US private payrolls for September came in worse than expected.
• Eurozone Retail Sales came in at -2.1% YoY in August vs.-1% prior.
• Traders will monitor German trade data and US weekly Jobless Claims on Thursday.

The EUR/USD pair recovers some lost ground above the 1.0500 area during the early Asian session on Thursday. The rebound of the pair is supported by the weaker US Dollar (USD) broadly and the softer labor market data. The major pair currently trades near 1.0505, up 0.03% for the day.

Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD relative to a basket of foreign currencies, drops to 106.77 after retracing from the high of 107.34

On Thursday, Automatic Data Processing (ADP) revealed that US private payrolls for September rose by 89,000 from 180,000 in the previous reading, below the estimation of 153,000. The figure registered the lowest level since January 2021. Meanwhile, the US ISM Services PMI dropped to 53.6 in September from 54.5 in August, meeting the market expectations.

Traders await the US Nonfarm Payrolls data on Friday. If the report shows a weaker figure, it might drag the Greenback against its rivals and act as a tailwind for the EUR/USD pair.

Markets anticipate that the European Central Bank (ECB) will maintain the interest rate in the next meeting. On Wednesday, ECB Governing Council member Mario Centeno said that the inflation in the Euro area was falling faster than when it was rising and the central bank can expect the rate cycle has been completed by now, and with present conditions. While ECB Vice President Luis de Guindos stated that ECB will continue to follow a data-dependent approach.

About the data, the Eurozone Retail Sales fell 2.1% YoY in August from a 1% drop in the previous reading, worse than the expectation of a 0.3% decline. On a monthly basis, the figure fell by 1.2% versus a 0.1% drop prior. Additionally, the Eurozone Producer Price Index (PPI) declined by 0.6%, in line with the market consensus.

Looking ahead, market players will focus on the German trade data due on Thursday as well as the US weekly Jobless Claims. On Friday, the attention will shift to the highly-anticipated Nonfarm Payrolls. These events could trigger the volatility in the market. Traders will take cues from these figures and find trading opportunities around the EUR/USD pair.