The EUR/USD pair edged lower on a weekly basis, bottoming at 1.1496 on Friday, to finally settle barely above this level, not far above 1.1468, the November monthly low. Financial markets stood in a wait-and-see mode throughout the first half of the week, ahead of the release of the United States (US) delayed data. At the end, none of it was enough to trigger a directional movement, with EUR/USD still stuck to familiar levels.
United States employment situation
The US published employment-related data throughout the week, starting with the ADP four-week average, which showed that in the four-week period ending November 1, the private sector lost 2,500 jobs, after losing 11,250 in the previous week. The figures are preliminary and subject to revision, yet hint at quite poor labour market performance in October.
The country also released Initial Jobless Claims for the last six weeks, including those in which the federal government remained shut down, which stood between 220K and 232K, peaking at the beginning of the shutdown, yet later stabilizing within average levels.
Finally, the US published the September Nonfarm Payrolls (NFP) report, which showed that 119,000 new job positions were created through the month, better than the 50,000 anticipated by market analysts. The same report showed the Unemployment Rate ticked higher, to 4.4% from the previous 4.3%, also missing expectations of an unchanged reading. Finally, the Participation Rate rose from 62.3% in August to 62.4%, partially offsetting the increase in the unemployment rate.
The US Dollar (USD) suffered some ups and downs following the release of the NFP report, but nothing was actually relevant. And it is logical, considering the aged data and the partial October/November figures suggesting the labor market deteriorated further in these last few weeks.
The positive NFP numbers barely affected the upcoming Federal Reserve (Fed) monetary policy meeting, scheduled for December 9-10, with investors weighing tepid partial figures: At the time of writing, the CME FedWatch Tool shows the odds for a 25 basis points (bps) cut stand at 66.6% vs 33.4% of a no change. At the beginning of the week, market bets on a rate cut were around 44%.
At this point, it is worth adding that the US announced it won’t release the October NFP report, but some of the October data will be released alongside November figures on December 16, past the Fed’s announcement.
Beyond employment data, S&P Global released the flash estimates of the November Purchasing Managers’ Indexes (PMIs) on Friday. Data was mixed but still signaled steady growth, as the Manufacturing PMI printed at 51.9, slightly below the 52 anticipated, while the Services index was upbeat, posting 55 vs the anticipated 54.8. As a result, the Composite PMI ticked from 54.6 in October to 54.8.
European “stable” economy hangs by a thread
Across the pond, European data was once again tepid. Figures were not worrisome, but neither encouraging, and maintained the Euro (EUR) subdued.
The Eurozone confirmed that the Harmonized Index of Consumer Prices rose at an annualized pace of 2.1% in October, as previously calculated. The core annual reading was confirmed at 2.4%, also matching the preliminary estimate. Also, Consumer Confidence stood at -14.2 in November, according to preliminary estimates, worse than the -14 expected.
Germany reported that the October Producer Price Index (PPI) rose a modest 0.1% in the month and decreased by 1.8% on a yearly basis. Finally, on Friday, the Hamburg Commercial Bank (HBOC) published the flash estimates of the November PMIs.
“Germany’s private sector saw a loss of momentum in November, with companies recording slower increases in both business activity and new orders,” according to the latest survey, which showed manufacturing and services output shrinking, leaving the Composite PMI at 52.1, worse than the previous 53.9 and below the 53.7 anticipated. The Eurozone indexes came in mixed, with the Services PMI improving from 53 in October to 53.1, but the Manufacturing PMI contracted to 49.7 from 50. The Composite PMI now stands at 52.4, down from the 52.5 posted in October.
Central bankers looping
Meanwhile, multiple European Central Bank (ECB) and Fed officials publicly spoke but stuck to their guns. ECB officials repeated the well-known comfort messages of being attentive but overall at a good place on monetary policy, while Fed officials generally lean towards an interest rate cut in December.
What’s next?
At the end of the day, the direction of EUR/USD will depend on monetary policy decisions. The ECB is widely anticipated to stay on hold in December, but the uncertainty surrounding the US economic situation spurs doubts about the Fed’s ability to continue trimming rates.
In the upcoming days, Germany will unveil the November IFO Business Climate survey, the final estimate of the Q3 Gross Domestic Product (GDP), October Retail Sales, and the flash estimate of the November HICP. The Eurozone macroeconomic calendar will be lighter, as the most relevant figure scheduled is the November Consumer Confidence.
As for the US, official organizations confirmed the release of September Retail Sales, PPI, and Durable Goods Orders data, alongside the usual weekly employment-related reports. Additional information could be provided as the days go by and federal workers resume activity.
Generally speaking, whatever data can shape central banks’ decisions will set the tone for the USD. Hawkish bets will help strengthen the American currency, while dovish ones will weigh on it. As for the EUR, there seems to be a continued wait-and-see until the economic frame starts improving at a more substantial pace.
EUR/USD technical outlook
Technical Analysis:
The EUR/USD pair is neutral-to bearish, according to technical readings in the daily chart. The pair trades around 1.1510, while below a bearish 20-day Simple Moving Average (SMA) that slopes lower beneath the 100-day SMA, at 1.1566 and 1.1651, respectively. The pair is still above the 200-day SMA that trends higher at 1.1401, although it is losing its upward strength, all of which paints a bearish future for EUR/USD. At the same time, the Momentum indicator holds flat just below its midline, lacking directional strength, while the Relative Strength Index (RSI) indicator sits at 38.61, hinting at another leg south.
The risk also skews to the downside in the weekly chart, as the 20-week SMA has turned marginally lower at around 1.1650, containing advances throughout the week. EUR/USD remains above the 100- and 200-week SMAs, underscoring a broader bullish structure. Finally, technical indicators are showing downward momentum; the Momentum indicator is just below its midline, and the RSI is at 49, reflecting growing bearish sentiment.
Any recovery would need to extend beyond the 20-week SMA at 1.1650 to hint at a change in the building bearish trend, while a daily close below 1.1470, a long-term static support area, should open the door for a steeper decline.
(The technical analysis of this story was written with the help of an AI tool)
