EUR/USD Analysis: Euro Slides Toward 1.1180 Ahead of US NFP Data

EUR/USD Retracts Despite Upbeat German Industrial Data

The EUR/USD pair extended its decline for a second consecutive session on Friday, fluctuating between 1.1180 and 1.1200 during European trading hours. The pair pulled back from Thursday's high near 1.1270 as safe-haven demand for the US dollar strengthened alongside a risk-off mood in equity markets. Positive economic data out of Germany failed to provide sufficient support for the single currency.

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According to data from Destatis, German industrial production grew by 0.7% month-on-month in September, surpassing market expectations of flat performance (0.0%) and improving on August's 0.1% increase. Strong output in the automotive and pharmaceutical sectors offset contractions in construction and machinery manufacturing. Meanwhile, Eurostat is set to release September retail sales for the Eurozone, with consensus pointing to a 0.1% decline following a 0.1% increase in August.

US Dollar Supported by Risk Aversion and Fed Outlook

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The US dollar gained momentum as falling equity markets, particularly across US and Asian technology and semiconductor stocks, fueled safe-haven flows. Investor sentiment was dampened by sector-specific concerns in artificial intelligence and potential regulatory shifts in the US. Strategists at OCBC note that the broader dollar outlook remains underpinned by resilient US economic growth, persistent inflation, and expectations of sustained monetary tightening by the Federal Reserve.

Market participants are focused on the upcoming US Nonfarm Payrolls (NFP) report for October. Ahead of the release, labor market indicators have remained strong, with initial jobless claims hitting a four-month low, ADP employment growth beating expectations, and JOLTS job openings rising sharply in September. Another strong labor report could reinforce upside potential for the US dollar.

Technical Analysis: Bearish Momentum Prevails

From a technical perspective, EUR/USD remains under selling pressure, with negative momentum oscillators and price action holding below key moving averages. The pair recently failed to hold above its 20-day Simple Moving Average (SMA), reinforcing a bearish bias. Immediate support lies in the 1.1180–1.1150 area, followed by a major support target at 1.1100. On the upside, resistance is anchored at the 20-day SMA and Thursday's peak near 1.1270.

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