How could it affect EUR/USD?

Ahead of the key macro data, a fresh wave of the global risk-aversion trade assists the safe-haven US Dollar (USD) to gain strong follow-through traction on Friday and build on the previous day's goodish recovery from a seven-week low. This, in turn, is seen as a key factor behind the EUR/USD pair's sharp intraday slide back closer to the 1.0700 mark. A stronger US macro data might force investors to scale back their expectations for an imminent pause of the Federal Reserve's rate-hiking cycle and would be enough to provide an additional boost to the Greenback. 

Conversely, a weaker report will add to worries about a deeper global economic downturn and further take its toll on the global risk sentiment. This, in turn, suggests that the path of least resistance for the USD is to the upside and supports prospects for an extension of the EUR/USD pair's ongoing retracement slide from its highest level since February 03, around the 1.0930 region touched on Thursday.

Eren Sengezer, Editor at FXStreet, offers a brief technical outlook for the major and writes: “EUR/USD broke below the ascending regression channel and the Relative Strength Index (RSI) indicator on the four-hour chart declined slightly below 60 after having stayed in overbought territory early Thursday, suggesting that buyers have moved to the sidelines.”

Eren also outlines important technical levels to trade the EUR/USD pair: “On the downside, 1.0820 (Fibonacci 23.6% retracement of the latest uptrend, 20-period Simple Moving Average (SMA)) aligns as immediate support. In case the pair falls below that level and starts using it as resistance, the downward correction could extend toward 1.0760 (Fibonacci 38.2% retracement) and 1.0720 (50-period SMA).”

“First resistance is located at 1.0850 (static level) ahead 1.0900 (psychological level, static level) and 1.0930 (multi-week high set on Thursday),” Eren adds further.