Dollar edges higher, all eyes on US NFP

The EURUSD pair softened to 1.1290 during the Asian session on Friday, with the dollar edging higher against the euro amid optimism about a de-escalation in the global trade conflict.

All eyes will be on the US April nonfarm payrolls (NFP) report, which is due later on Friday.

A social media account affiliated with Chinese state media said on Thursday the US has reached out to China to begin negotiations regarding President Donald Trump’s 145% tariffs. US officials, including Treasury Secretary Scott Bessent and White House economic adviser Kevin Hassett, also expressed hope for progress in easing trade tensions. This, in turn, provides some support to the greenback and creates a headwind for the major pair.

US data released on Thursday were mixed.

The weekly Initial Jobless Claims for the week ended April 26 rose by 241,000, compared to the previous week’s 223,000 (revised from 222,000), according to the US Department of Labor, coming in above the market consensus of 224,000.

Meanwhile, the ISM Manufacturing Purchasing Managers’ Index (PMI) declined to 48.7 in April, from 49.0 in March, beating the market expectation of 48.

On the Euro front, traders have almost priced in a 25 basis points (bps) rate cut by the European Central Bank in the June policy meeting.

ECB officials have forecasted a further slowdown in inflation and economic growth in response to tariffs imposed by the US on its trade partners. The rising bets of further ECB rate cuts might weigh on the shared currency in the near term.

The NFP report will take centre stage later on Friday. The US is expected to have added 130,000 new job positions in April, while the Unemployment Rate is estimated to stay at 4.2%, unchanged from March. In the case of a softer-than-expected reading, this could undermine the USD against the EUR.

(Source: OANDA)