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EUR/USD edges higher, with all eyes on US non-farm payrolls

EUR/USD reversed its weekly decline to above $1.08, after facing consistent downside pressure in the first half of the week. Markets adopted a risk-on tone in Asian trade on Friday, ahead of all-important US jobs data.

EUR/USD boosted by risk-on sentiment ahead of US jobs data

EUR/USD got a boost from a bout of risk-on sentiment to end the week, as markets await all-important April jobs data for the US economy on Friday.

The euro was on track for four straight daily losses when it slipped below $1.08 for the first time since 24 April.

Those falls followed some poor economic data in the wake of the Covid-19 crisis, along with continued divisions between EU member states about the European Central Bank's (ECB’s) role in fostering growth for the eurozone economy.

However, risk-on sentiment was assisted in the Asian session on Friday by some good news on trade, following news that senior trade representatives from the US and China had held further discussions on a trade deal late on Thursday.

Global stocks continued to edge higher and the US dollar – which has largely traded as a safe haven through the uncertainty – lost ground against all the major pairs.

Now, all eyes are on US non-farm payrolls scheduled for 8:30am EST (12:30pm GMT). The data for April will provide an update on how the US jobs market has absorbed the brunt of the impact, since the Covid-19 health pandemic took hold in March.

US economy expected to lose more than 20 million jobs in April

Ahead of Friday’s employment data, the median forecast is for a monthly decline of around 22 million jobs, which would see the unemployment rate climb above 50%.

While a sharp miss either side of the forecast could have a material impact on EUR/USD, a result in line with expectations may not move the needle, given that traders are likely to have already priced in a record monthly jobs decline in April.

Earlier this week, analysts from Westpac said the 'risk to these outcomes lay heavily to the downside'.

'Further declines will also be seen in May and June, likely seeing the unemployment rate rise to over 20% mid-year,' Westpac said.

Looking at the day ahead, London markets are closed for the bank holiday which means broader trading volumes will be lighter to end the week.

In European data, Germany reported a March trade balance of €17.4 billion, against €18.8 billion expected as exports and imports both fell sharply.

Risk-on appetite extended into early European trade, as stock futures for the major European indices in Germany and France both pointing around 1% higher.

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