The euro is stuck below 1.18; will tonight's non-farm payrolls data be the key to breaking the deadlock?
2026-05-08 17:16:43
The euro edged higher against the dollar on Friday (May 8), trading around 1.1750. Despite risk aversion triggered by escalating tensions in Iran and weak German economic data, the euro showed some resilience, but remained below 1.1800, trading within the range of the past three weeks.
I. Escalating geopolitical risks cast doubt on the prospects of a ceasefire.
Reports of clashes between the US and Iran in the Strait of Hormuz on Friday heightened risk aversion in markets, dampening expectations for an imminent peace agreement. However, Trump stated that the ceasefire remained in effect and urged Tehran to sign the agreement. Meanwhile, Iranian authorities are studying a 14-point peace proposal put forward by the United States.
II. Double whammy from German data: Industrial output declines for two consecutive months, trade surplus narrows.
The data released by Germany was not optimistic. Industrial output contracted for the second consecutive month in March, while the market had expected a rebound. The trade surplus also narrowed more than expected, with unexpected export growth being offset by a sharp rise in imports.
III. Market focus shifts to non-farm payrolls
Later in the day, market focus will shift to the US non-farm payrolls report, with job growth expected to slow significantly in April. Investors will be closely watching this data, as it could provide further clues about the path of interest rates against the backdrop of widening policy divisions within the Federal Reserve.
IV. Technical Analysis: Cautiously optimistic, but lacking breakout momentum. EUR/USD is slightly bullish, currently holding above the opening price of 1.1726. However, momentum indicators are mixed: the 4-hour RSI is hovering around 54, and the MACD has slightly turned negative and flattened, suggesting that upward pressure is weakening.
From a longer-term perspective, the exchange rate is still oscillating within a horizontal range, with resistance at 1.1790-1.1800, forming a barrier for the bulls. The exchange rate appears to need additional momentum to break through this area and target the April high near 1.1850.
On the downside, the intraday low (slightly above 1.1720) may provide short-term support. However, the key area for bears is at 1.1645-1.1675 – this area repeatedly prevented sellers from pushing further down in April.
The euro has shown some resilience under multiple pressures, but technical indicators suggest that upward momentum is weakening and it remains trapped within a three-week range below 1.18. Tonight's non-farm payroll report could be a key catalyst to break the deadlock—weak data could see the euro test the 1.1790-1.1800 resistance zone; strong data could lead to a pullback to the 1.1645-1.1675 support zone. Until then, the exchange rate is likely to remain in a narrow range.
At 17:12 Beijing time, the euro was trading at 1.1767/68 against the US dollar.
How has the euro managed to remain stable under multiple pressures?
I. Escalating geopolitical risks cast doubt on the prospects of a ceasefire.
Reports of clashes between the US and Iran in the Strait of Hormuz on Friday heightened risk aversion in markets, dampening expectations for an imminent peace agreement. However, Trump stated that the ceasefire remained in effect and urged Tehran to sign the agreement. Meanwhile, Iranian authorities are studying a 14-point peace proposal put forward by the United States.
II. Double whammy from German data: Industrial output declines for two consecutive months, trade surplus narrows.
The data released by Germany was not optimistic. Industrial output contracted for the second consecutive month in March, while the market had expected a rebound. The trade surplus also narrowed more than expected, with unexpected export growth being offset by a sharp rise in imports.
III. Market focus shifts to non-farm payrolls
Later in the day, market focus will shift to the US non-farm payrolls report, with job growth expected to slow significantly in April. Investors will be closely watching this data, as it could provide further clues about the path of interest rates against the backdrop of widening policy divisions within the Federal Reserve.
IV. Technical Analysis: Cautiously optimistic, but lacking breakout momentum. EUR/USD is slightly bullish, currently holding above the opening price of 1.1726. However, momentum indicators are mixed: the 4-hour RSI is hovering around 54, and the MACD has slightly turned negative and flattened, suggesting that upward pressure is weakening.
From a longer-term perspective, the exchange rate is still oscillating within a horizontal range, with resistance at 1.1790-1.1800, forming a barrier for the bulls. The exchange rate appears to need additional momentum to break through this area and target the April high near 1.1850.
On the downside, the intraday low (slightly above 1.1720) may provide short-term support. However, the key area for bears is at 1.1645-1.1675 – this area repeatedly prevented sellers from pushing further down in April.
Narrow range trading awaits non-farm payrolls; a breakout requires a catalyst.
The euro has shown some resilience under multiple pressures, but technical indicators suggest that upward momentum is weakening and it remains trapped within a three-week range below 1.18. Tonight's non-farm payroll report could be a key catalyst to break the deadlock—weak data could see the euro test the 1.1790-1.1800 resistance zone; strong data could lead to a pullback to the 1.1645-1.1675 support zone. Until then, the exchange rate is likely to remain in a narrow range.
At 17:12 Beijing time, the euro was trading at 1.1767/68 against the US dollar.
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