• EUR/USD struggles to gain any meaningful traction on Friday and oscillates in a narrow band.
• The technical setup seems tilted in favour of bears and supports prospects for further decline.
• Traders now await the release of the key US NFP report before placing fresh directional bets.

The EUR/USD pair is seen oscillating in a narrow trading band during the Asian session on Friday and consolidating its recovery gains registered over the past two days, from mid-1.0400s or the YTD low touched earlier this week. Spot prices currently trade just below the 1.0550 level, nearly unchanged for the day, as traders keenly await the release of the closely-watched US monthly employment details, popularly known as the NFP report.

Heading into the key data risk, the prospects for further policy tightening remain supportive of elevated US Treasury bond yields and act as a tailwind for the US Dollar (USD). Apart from this, a generally weaker tone around the equity markets further seems to underpin the safe-haven Greenback. This, along with expectations that additional rate hikes by the European Central Bank (ECB) may be off the table for now, contributes to keeping a lid on the EUR/USD pair.

From a technical perspective, the recent decline from a 17-month peak touched in June has been along a descending channel and points to a well-established downtrend. Moreover, the Relative Strength Index (RSI) on the daily chart has also recovered from the oversold territory. Hence, any subsequent move up might still be seen as an opportunity to initial fresh bearish positions around the EUR/USD pair and run the risk of fizzling out rather quickly.

Meanwhile, any positive reaction to a disappointment from the US jobs data could lift spot prices beyond the 1.0600 round-figure mark. The momentum could get extended, though is more likely to remain capped near the top boundary of the aforementioned channel, currently around mid-1.0600s. The latter should act as a key pivotal point, which if cleared will suggest that the EUR/USD pair has formed a nea-term bottom and shift the bias in favour of bulls.

On the flip side, the 1.0500 psychological mark now seems to protect the immediate downside. Some follow-through selling could make spot prices vulnerable to refresh the YTD low and challenge the ascending channel support, near the 1.0420-1.0415 region. A convincing break below will be seen as a fresh trigger for bearish traders and pave the way for an extension of the EUR/USD pair's near-three-month-old downward trajectory