EUR/USD under heavy pressure near 1.1000, focus on NFP

• EUR/USD drifts lower and challenges 1.1000.
• The dollar gathers extra steam and rose to fresh cycle tops.
• US Nonfarm Payrolls will be the salient event later in the session.

The selling pressure around the European currency remains well and sound for yet another session and drags EUR/USD to the boundaries of the psychological support at 1.1000 on Friday.

EUR/USD weaker on safe haven demand, looks to data, Ukraine

Another day, another record low for EUR/USD. This time the pair probed the area near the 1.1000 support against the backdrop of the intense demand for the greenback and the safe haven universe in general.

Indeed, worsening conditions in the Russia-Ukraine military conflict led investors to increase their positions in safer assets. This behaviour intensified following the failed attempts to agree a ceasefire at Thursday’s talks between officials of both countries.

The firm note in the German money markets, in the meantime, sustains further the interest in bonds and drags yields of the 10y Bund back to the -0.020% region, along with the pullback seen in their US peers.

Back to the docket, Retail Sales in the broader Euroland expanded 0.2% MoM in January and 1.7% over the last twelve months and Germany’s trade surplus widened to €9.4B in the first month of the year.

The NA session will be much more entertaining with the release of February’s Nonfarm Payrolls (400K exp.) and the Unemployment Rate (3.9% exp.).

What to look for around EUR

EUR/USD continues to look to the geopolitical scenario and risk appetite trends for direction. On this, the recent deterioration of the Russia-Ukraine front is expected to keep the pair under pressure amidst solid risk-off sentiment and demand for the dollar. In the longer run, occasional bouts of strength in the pair should remain underpinned by speculation of a potential interest rate hike by the ECB probably sooner than many anticipate, higher German yields, persevering elevated inflation and a decent pace of the economic activity and auspicious results from key fundamentals in the region.

Key events in the euro area this week: Germany Trade Balance, EMU Retail Sales (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the euro area. Speculation of ECB tightening/tapering later in the year. Presidential elections in France in April. Geopolitical concerns from the Russia-Ukraine conflict.

EUR/USD levels to watch

So far, spot is losing 0.48% at 1.1012 and faces the next up barrier at 1.1192 (10-day SMA) followed by 1.1309 (55-day SMA) and finally 1.1395 (weekly high Feb.16) and finally 1.1395 (weekly high Feb.16). On the other hand, a drop below 1.1001 (2022 low Mar.4) would target 1.1000 (round level) en route to 1.0870 (low May 25 2020).