EUR/USD price faces key resistance near 1.0600 ahead of crucial NFP report
NFP data may decide EUR/USD’s breakout or bearish reversal
EUR/USD price may end the week on a strong note as it is poised to post two consecutive up-close weeks since its recovery from a multiyear low.
The pair broke out of a three-day consolidation on Thursday, reaching a five-day high, but faced resistance near the 1.0600 psychological level, which has capped gains for several weeks.
EUR/USD price dynamics (November-December 2024). Source: TradingView.
As the market enters the final trading day of the week, December 6, price action has remained muted, especially as traders await the release of the crucial Nonfarm Payrolls (NFP) data, set to be published later today. And despite breaking higher on Thursday, EUR/USD has seen little movement in the Asian and European sessions, with price action essentially stalling in anticipation of the NFP release.
NFP data to determine EUR/USD short-term outlook
The November NFP report is expected to show that the US economy added 200,000 jobs in November, a significant recovery from the meager 12,000 job gain in October, which was heavily distorted by the impacts of two hurricanes and the strike at Boeing. This improvement would suggest that the US job market is stabilizing after temporary disruptions, and could influence expectations for the Federal Reserve’s future policy moves. Analysts expect the unemployment rate to rise slightly to 4.2% from October’s 4.1%, while wage growth is forecast to slow slightly, with average hourly earnings projected to grow by 3.9% year-on-year, down from October’s 4.0% increase.
The results of the NFP report will be closely watched, as they hold the potential to shift market sentiment and influence the future direction of the US dollar. Fed Chairman Jerome Powell has recently maintained a cautious tone regarding interest rate cuts, given that inflation is still above the 2% target and the labour market remains solid.
If the job data reports come in stronger than expected, it could strengthen the USD and cause headwinds for EUR/USD from the critical 1.0600 resistance zone, potentially pushing pressure on the pair to lower support levels. Conversely, a weaker-than-expected report could provide room for EUR/USD to break above the 1.0600 psychological level thus extending its recovery.
Political uncertainty in France puts pressure on the euro. This is due to the no-confidence vote against Prime Minister Michel Barnier, which raises concerns about stability in the eurozone.
