- The EUR/USD pair is trading cautiously around the 1.0300 level as investors await US non-farm payrolls data for December, which will impact the Federal Reserve’s interest rate expectations.
- US President-elect Donald Trump is expected to declare a national economic emergency.
- The euro rose despite traders pricing in four interest rate cuts by the European Central Bank this year.
The EUR/USD pair is trading weakly around the 1.0300 level in the European session on Friday. The major currency pair is trading cautiously as investors await the US Non-Farm Payrolls (NFP) data for December, which will be published at 13:30 GMT. Investors will pay close attention to the official US employment report because it will influence market expectations about when the Federal Reserve will cut interest rates for the first time this year.
Economists expect 160,000 new workers to be added to the labor force in December, down from 227,000 in November. It is estimated that the unemployment rate has remained constant at 4.2%. Month-on-month average hourly earnings are expected to rise at a slower rate of 0.3% compared to the previous release of 0.4%, with annual figures growing steadily by 4%.
Signs of slowing labor market conditions should force traders to scale back bets supporting the Fed to keep interest rates unchanged at the March meeting at their current range of 4.25%-4.50%. Meanwhile, traders are confident that the central bank will maintain the status quo later this month, according to the CME FedWatch tool.
Ahead of the US non-farm payrolls data, the US Dollar Index (DXY), which tracks the value of the dollar against six major currencies, settled above 109.00. The performance of the US dollar (USD) remained flat as President-elect Donald Trump is expected to declare a national economic emergency to provide legal justification for preparing an import tariff plan for the country’s allies and adversaries, CNN reported.
Daily summary of market drivers: EUR/USD stabilizes ahead of US non-farm payrolls data
- The EUR/USD pair is expected to be fully USD-led on Friday, as US non-farm payrolls data looms. Meanwhile, the Euro (EUR) is outperforming against the majority of its peers, with the exception of the Japanese Yen (JPY). The euro is rising even though traders have factored in four interest rate cuts by the European Central Bank (ECB), which will come at each meeting by the summer.
- European Central Bank policymakers are comfortable with strong dovish bets as inflationary pressures in the euro zone are broadly under control. However, price pressures rose expectedly in December. François Villeroy, a policymaker at the European Central Bank and governor of the Bank of France, said on Wednesday that price pressures are expected to rise in December, however, interest rates will continue to move towards the neutral rate “without slowing the pace by the summer” if the data confirms that… “The decline in price pressures will not continue.”
- Meanwhile, the weak economic outlook in the euro zone has boosted bets supporting further interest rate cuts. Investors expect that the old continent will face a trade war with the United States, as the policies coming from President-elect Donald Trump will be highly protectionist and will affect the export sector in the euro zone.
Euro price today
The table below shows the percentage change of the Euro (EUR) against the major currencies listed today. The euro was the strongest against the New Zealand dollar.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | -0.02% | 0.14% | 0.00% | 0.08% | 0.12% | 0.31% | 0.22% | |
| euro | 0.02% | 0.16% | 0.02% | 0.10% | 0.14% | 0.32% | 0.23% | |
| GBP | -0.14% | -0.16% | -0.14% | -0.06% | -0.02% | 0.17% | 0.08% | |
| JPY | 0.00% | -0.02% | 0.14% | 0.08% | 0.11% | 0.29% | 0.22% | |
| Canadian | -0.08% | -0.10% | 0.06% | -0.08% | 0.03% | 0.23% | 0.14% | |
| Australian dollar | -0.12% | -0.14% | 0.02% | -0.11% | -0.03% | 0.19% | 0.10% | |
| New Zealand dollar | -0.31% | -0.32% | -0.17% | -0.29% | -0.23% | -0.19% | -0.09% | |
| Swiss franc | -0.22% | -0.23% | -0.08% | -0.22% | -0.14% | -0.10% | 0.09% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select EUR from the left column and move along the horizontal line to USD, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Technical Analysis: EUR/USD remains above 1.0200
EUR/USD is trading near a key support level drawn from the September 2022 high at 1.0200 on the weekly chart. The outlook for the major currency pair is broadly bearish as the 20-week Exponential Moving Average (EMA) at 1.0595 is falling.
The 14-week Relative Strength Index (RSI) has fallen to near 30.00, indicating strong downside momentum. However, a slight rebound cannot be ruled out as the momentum indicator has turned into oversold territory.
Looking down, the pair may find support near the full 1.0100 level. Conversely, the January 6 high of 1.0437 will be the main barrier for the EUR bulls.
Economic indicator
Nonfarm payrolls
The Nonfarm Payrolls report shows the number of new jobs created in the United States during the previous month at all nonfarm businesses. Released by US Bureau of Labor Statistics (Plus). Monthly changes in payroll can be very volatile. The number is also subject to strong revisions, which can also create fluctuations in the Forex board. In general, a high reading is considered bullish for the US Dollar (USD), while a low reading is considered bearish, although revisions to the previous months and the unemployment rate are just as important as the headline number. Therefore, the market reaction depends on how the market evaluates all the data in the BLS report as a whole.
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