Positive developments in the tariff war between the United States (US) and China have managed to ease tensions in the market with signals for negotiations to be held.
The situation has also saved the US dollar from falling following the US economic data published on Wednesday with declining readings.
The signals are not good for the labor sector ahead of tonight's NFP report as the ADP data report showed a weak increase in private employment at only 62,000 for April, following the slow JOLTS data published the previous Tuesday.
Adding to the concerns is the fact that US economic growth recorded a contraction of 0.3% for the first quarter of 2025, proving the adverse effects of the tariffs implemented by President Donald Trump.
The US dollar maintained its strength in the New York session yesterday Thursday, but investors are cautious ahead of today's NFP jobs report.
Looking at the EUR/USD currency pair chart, the price has declined to the 1.13000 support zone as the US dollar managed to absorb the pressure of the declining data.
The price rebounded slightly after touching the 1.12700 level to return to hovering around 1.13000 again in the Asian session trading this morning (Friday).
The price movement remained below the Moving Average 50 (MA50) resistance line on the 1-hour time frame on the chart, which shows a bearish signal.
If the downward pattern continues from the 1.13000 zone, the price could head towards the 1.12000 level as the next focus level.
However, if the NFP report has a significant positive impact on the US dollar, the price risks falling lower and could possibly reach around the 1.11000 zone.
On the other hand, the situation will change if the US dollar loses its strength again and the price will bounce higher at the close of trading this week.
From the 1.13000 zone, the price increase will retest the resistance zone at 1.14000 as per the trading pattern at the beginning of the week.
