The financial world watches closely as the United States gears up to release its highly anticipated Nonfarm Payrolls (NFP) data for December, scheduled for Friday at 13:30 GMT. Economists predict a rise of 160,000 jobs, marking a decline from November's robust increase of 227,000. This slowdown reflects the fading impact of the distortions caused by recent hurricanes and the Boeing strike. The report is crucial for forecasting the US Dollar's next moves and assessing future interest rate cuts by the Federal Reserve.
The EUR/USD currency pair remains under pressure, staying below all major daily Simple Moving Averages (SMA). This movement occurs amid a bullish US Dollar supported by the US-Japan yield differential. The 14-day Relative Strength Index (RSI) also trends south below the 50 level, indicating potential downside risks for the pair in the near term.
“EUR/USD remains below all major daily Simple Moving Averages (SMA) in the lead-up to the NFP showdown. Meanwhile, the 14-day Relative Strength Index (RSI) points south below the 50 level. These technical indicators suggest that the pair remains exposed to downside risks in the near term.” – Dhwani Mehta, Asian Session Lead Analyst at FXStreet
The upcoming NFP report is expected to significantly influence the US Dollar, especially following hawkish Federal Reserve minutes published earlier this week. The report arrives on the heels of a JOLTS Job Openings report from the Bureau of Labor Statistics (BLS), which revealed an impressive climb to 8.09 million, surpassing forecasts of 7.7 million and exceeding October's figure of 7.83 million.
Despite these developments, market participants remain cautious due to a disappointing ADP jobs report, which has fueled expectations of weak payroll data. Historically, ADP data does not correlate strongly with official NFP figures, yet it has nonetheless heightened concerns.
“We expect payroll growth to cool down closer to trend in December following the October-November gyrations that were triggered by one-off shocks.” – TD Securities analysts
Average Hourly Earnings (AHE) are projected to rise by 4% year-over-year in December, maintaining the pace seen in November. The unemployment rate is expected to stabilize at 4.2%, though some analysts suggest the household survey's employment series could see a meaningful rebound.
“The UE rate likely stabilized at 4.2% despite our expectation for a meaningful rebound in the household survey's employment series. Separately, we look for wage growth to mean-revert to 0.1% m/m following a string of hot monthly prints,” – TD Securities analysts
The EUR/USD pair faces critical technical levels as it hovers below key SMAs. A decisive break above the 21-day SMA at 1.0391 could initiate a recovery toward higher targets, while a sustained break below the two-year low at 1.0224 could lead to further declines.
“Buyers need a decisive break above the 21-day Simple Moving Average (SMA) at 1.0391 to initiate a meaningful recovery toward the January 7 high of 1.0437. The next relevant topside target aligns at the 50-day SMA at 1.0510. Fresh buying opportunities will rise above that level, calling for a test of the December 6 high of 1.0630. Conversely, if EUR/USD yields a sustained break of the two-year low at 1.0224, additional declines will aim for the 1.0150 psychological barrier.” – Dhwani Mehta, Asian Session Lead Analyst at FXStreet
Speculations surrounding former President Trump's potential tariff plans continue to offset impacts from recent US economic data releases, adding another layer of complexity to market reactions.