EUR/USD looks flat around 1.1550, focus on NFP

• EUR/USD exchanges gains with losses around 1.1550.
• German Industrial Production contracted 1.1% MoM in September.
• US Nonfarm Payrolls takes centre stage later in the NA session.

EUR/USD trades without direction in the mid-1.1500s amidst the broad-based side-lined mood in the global markets.

EUR/USD remains vigilant ahead of Payrolls

The cautious stance among market participants ahead of the release of US Nonfarm Payrolls contributes to the lack of direction in EUR/USD, which continues to navigate the lower end of the weekly range in the mid-1.1500s.

The greenback, in the meantime, manages to keep the trade in the upper end of the recent range albeit a tad below recent peaks near 94.50 (Thursday), all amidst a pick-up in yields in the front end of the curve and further weakness in the belly and the long end.

In the euro docket, Industrial Production in Germany contracted at a monthly 1.1% in September and EMU’s Retail Sales are due next.

Further out, ECB’s Vice-President L.De Guidos reiterated once again that current elevated inflation remains transitory and it is expected to subside next year. Still around the ECB, Board member G.Maklouf said the central bank needs to be careful when it comes to inflation, adding that he would support taking action on the issue sooner rather than later while noting that high prices could linger for longer.

Across the pond, all the attention will be on the release of Nonfarm Payrolls for the month of October (450K exp.) and the Unemployment Rate, which is seen easing to 4.7% during last month.

What to look for around EUR

EUR/USD collapsed to the boundaries of the 2021 low on Thursday on the back of the strong rebound in the dollar. In the meantime, spot continues to look to the risk appetite trends for direction as well as dollar dynamics, while the loss of momentum in the economic recovery in the region - as per some weakness observed in key fundamentals - is also seen pouring cold water over investors’ optimism and tempering bullish attempts in the European currency. Further out, the single currency should remain under scrutiny amidst the implicit debate between investors’ expectations of a probable lift-off sooner than anticipated and the ECB’s so far steady hand, all amidst the persevering elevated inflation in the region and prospects that it could extend further than previously estimated.

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

Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the region. Sustainability of the pick-up in inflation figures. Pick-up in the political effervescence around the EU Recovery Fund in light of the rising conflict between the EU, Poland and Hungary on the rule of law. ECB tapering speculations.

EUR/USD levels to watch

So far, spot is up 0.01% at 1.1554 and faces the next up barrier at 1.1685 (55-day SMA) followed by 1.1692 (monthly high Oct.28) and finally 1.1755 (weekly high Sep.22). On the other hand, a break below 1.1528 (weekly low Nov.4) would target 1.1524 (2021 low Oct.12) en route to 1.1495 (monthly low Mar.9 2020).