The EUR/USD pair advanced for a second consecutive week, comfortably trading above the 1.1600 mark as Friday comes to an end. The US Dollar (USD) spent most of these last few days under pressure amid optimism about the United States (US) government reopening.
The US Senate agreed on a funding bill on Monday that will cover federal expenses until January 30. The said bill was passed by the Republican-controlled House of Representatives on Wednesday, and finally signed by President Donald Trump at the end of the day. As a result, EUR/USD peaked at 1.1655 on Thursday amid the US government comeback enthusiasm, with the latter fading ahead of the weekly close.
Until Thursday, Wall Street enjoyed market’s risk-appetite, with the Dow Jones Industrial Average (DJIA) posting record highs, as investors cheered the return of US macroeconomic releases ahead of the Federal Reserve (Fed) monetary policy meeting. The market sentiment took a turn for the worse, partially due to market participants being wary about overvalued tech shares, particularly those AI-related, and partially due to uncertainty about the next Fed move. Fed Chair Jerome Powell said that a December interest rate cut should not be taken for granted in the press conference that followed the October announcement.
Demand for high-yielding Euro (EUR) receded, albeit investors showed no interest in the USD, helping keep the pair afloat and near its weekly high.
When and how will the US data be back?
The US government remained on pause for forty-three days, officially the longest shutdown in the country’s history. Throughout that period, official organizations did not collect or release data. The Bureau of Labor Statistics (BLS) actually released September Consumer Price Index (CPI) figures, but there were no other official updates on employment, inflation, or growth.
The only certainty at this point is that some of the official organizations were unable to conduct the surveys that usually lead to the data. That means some figures could be just estimates. The other thing the market knows is that, after the previous government shutdown, data releases resumed five working days after the reopening. At this point, estimates point to American data beginning to flood macroeconomic calendars on Wednesday, November 19. But it is not certain. Finally, there is one additional caveat: figures may come out any day of the week and without much warning.
It is worth being extra attentive to the macroeconomic calendar in the upcoming weeks, as, regardless of whether the data is estimated or not, it will shape the tone of the December Fed’s monetary policy decision. At the time of writing, there are roughly equal odds for a 25-basis-point (bps) rate cut than for an on-hold announcement.
Eurozone steady in its “good place”
Across the pond, the Eurozone published some minor figures that had no material impact on the European Central Bank’s (ECB) future monetary policy decisions. Indeed, President Christine Lagarde made a point by stating that the central bank is vigilant, but in a good place regarding economic and monetary policy.
The calendar has little to offer: The bloc published the Sentix Investor Confidence index, which deteriorated in November to -7.4 from the -5.4 posted in the previous month, and September Industrial Production, which was up 0.2% MoM in September, and rose by 1.2% from a year earlier, missing expectations of 0.7% and 2.1%, respectively. Finally, on Friday, the final version of the Q3 Gross Domestic Product (GDP) was confirmed at 0.2% QoQ, while the annualized reading was upwardly revised to 1.4% from the preliminary estimate of 1.3%.
Germany published the November ZEW survey, which showed that Economic Sentiment in the country deteriorated to 38.5 from 39.3 in October. The same report showed that the assessment of the current situation improved a bit, to -78.7 from -80. Finally, the Eurozone Economic Sentiment improved to 25 in the same period, up from 22.7. Also, Germany’s Harmonized Index of Consumer Prices (HICP) rose by 2.3% YoY in October, and by 0.3% on a monthly basis, matching preliminary estimates. Generally speaking, European news was not enough to boost demand for the EUR.
In the upcoming days, the European Commission will release Economic Growth Forecasts, while the bloc will publish the final estimate of the October HICP. Things will be relatively calm on the European front until Friday, when the Hamburg Commercial Bank (HCOB) will publish the preliminary estimates of the November Purchasing Managers’ Indexes (PMIs). S&P Global will release US PMI figures for the same period also on Friday.
EUR/USD technical outlook
From a technical perspective, EUR/USD is neutral in the daily chart. The 20-day Simple Moving Average (SMA) slopes marginally lower at around 1.1585, providing near-term support. The 100-day SMA, on the other hand, heads nowhere at around 1.1693, providing dynamic resistance. At the same time, the 200-day SMA continues to rise well below the spot, cushioning the broader backdrop.
In the same chart, the Momentum indicator slips marginally lower near its midline, while the Relative Strength Index (RSI) indicator heads nowhere at around 53. Finally, EUR/USD develops inside an ascending channel coming from 1.1466, now providing support near 1.1602.
In the weekly chart, EUR/USD trades just below a flat 20-week SMA at 1.1664, the immediate support level. At the same time, the 100- and 200-week SMAs rise at 1.1030 and 1.0839, respectively. The price stands beneath the 20-week moving average but remains well above the longer-term averages, preserving a broader bullish bias. The Momentum indicator softens within neutral levels, while the RSI indicator eases to 55.28, still above the 50 midline. A clear close above the 20-week SMA at 1.1664 would expose the yearly high at 1.1918.
(The technical analysis of this story was written with the help of an AI tool)
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
