The EUR/USD pair is taking a breather on Thursday, consolidating at the mid-1.0500 area, as investors continue to ponder Federal Reserve Chair Jerome Powell's hawkish testimony before the U.S. Congress and ahead of the critical nonfarm payrolls report (NFP).
At the time of writing, the EUR/USD pair is trading at the 1.0575 area, 0.3% above its opening price, after striking a two-month low of 1.0524 on Wednesday. The mild recovery in the pair comes on the back of a moderate pullback in the dollar, weighed by the retreat in U.S. bond yields.
Following Powell's testimony, expectations of a 50 bps rate hike by the Fed at the March meeting increased, which sent the EUR/USD to two-month lows. According to the WIRP tool, investors are betting on higher probabilities of 77% of a 50 bps hike at the next meeting that would take the federal funds rates to 5.25%.
Still, on Thursday, U.S. initial jobless claims data showed 211,000 people filed for unemployment benefits in the week ending on March 3, above the 195,000 expected, suggesting a little "pain" in the labor market ahead of the government jobs report.
Markets could face volatility on Friday after February's NFP report, as Jerome Powell stated over the last two days that employment and inflation data would determine the next FOMC decision.
From a technical perspective, the EUR/USD pair holds a neutral to slightly bearish bias on the daily chart as indicators stand flat on negative territory, while the price bounced from an ascending 100-day SMA but remains capped below the 20-day SMA.
On the downside, a break below the 1.0525 (100-day SMA) could pave the way for a retest of the 1.0500 level en route to year-to-date lows at the 1.0480 zone. On the other hand, the 1.0600 psychological mark and the 20-day SMA at 1.0630 line up as immediate resistance levels ahead of 1.0700.