Title: EUR/USD prepares for an upside towards 0.9900 as DXY turns subdued, US NFP eyed

October 4, 2022 12:40 AM ET

By: AnalysisWatch

The EUR/USD is hovering around the weekly high of 0.9850 and is preparing to exceed it to break the critical hurdle of 0.9900. The asset has been moving sideways in a narrow range of 0.9735-0.9850 after a stronger bounce. There is a good chance that the consolidation will be broken to the upside as the US Dollar Index (DXY) is going through a difficult period given the slowdown in the US economy due to interest rate hikes by the Federal Reserve (Fed).

A decline in U.S. ISM Manufacturing PMI data has hurt the appeal of the DXY. The economic data fell sharply to 50.9 from expectations of 52.2 and the previous release of 52.8. In addition, the economic catalyst showing future demand has also weakened. The ISM index for new orders in the U.S. came in at 47.1, significantly lower than forecasts of 49.6 and the previous figure of 51.3.

The most important event this week will be the US employment data, which will be released on Friday.

Forecasters expect the U.S. economy to have added 250,000 jobs, compared to the previous figure of 315,000. Job creation forecasts were sharply reduced due to rising interest rates, which forced companies to pause the hiring process and postpone their expansion plans.

Meanwhile, eurozone bulls have welcomed Brussels' proposal for a stretched debt reduction plan to implement more development programs. The Financial Times reported Monday that "Brussels wants to give EU capitals more time to reduce their debt and make room for public investment as part of a sweeping overhaul of EU deficit rules."

On the economic data front, investors are awaiting the release of German retail sales, which are expected to fall 1.7%, while a 0.9% decline was reported.