The EUR/USD currency pair is currently trading just above 1.0550, maintaining a steady increase following noteworthy gains on Thursday. The momentum is driven by market anticipation for the upcoming Nonfarm Payrolls (NFP) data from the United States, which holds significant implications for future economic conditions. In terms of technical analysis, the near-term outlook appears positive, with the next key resistance level expected at 1.0600.
On Thursday, the EUR/USD pair surged by more than 0.7%. Prior to challenging the resistance at 1.0600, the pair adopted a consolidation pattern and has been observed around the 1.0570 level. The US dollar faced significant bearish sentiment, providing additional support for the rise of the EURO against the dollar. This shift was influenced by a recent report from the US Department of Labor, which indicated an uptick in first-time claims for unemployment benefits, rising to 224,000 in the week ending November 30, compared to 215,000 the week before.
The forthcoming labor market data for November is anticipated with great interest. Following a modest increase of 12,000 in October, attributed to adverse weather and strikes, forecasts suggest a more substantial rise of 200,000 for November’s NFP. Market participants are currently assessing a 70% likelihood of a 25 basis points rate cut by the Federal Reserve in December, according to current pricing indicators. A weak NFP reading of 150,000 or lower could solidify expectations for a rate reduction and apply further pressure on the dollar. Conversely, stronger than expected results could lead to a reevaluation of these expectations and impact EUR/USD negatively.
Additionally, speeches from several Federal Reserve officials during the American trading session may influence market sentiment and the dollar’s performance as traders approach the weekend. These comments are particularly noteworthy as they will come before the onset of the Fed’s blackout period.
In terms of technical positioning, the Relative Strength Index (RSI) on the 4-hour chart has recently pulled back to around 60, indicating that the bullish trend remains viable despite a temporary correction. The immediate resistance at 1.0600 is supported by key Fibonacci levels, while potential support zones reside around 1.0520-1.0530, 1.0500, and 1.0440.
