EUR/USD catches a break, gains ground ahead of Friday NFP release

• EUR/USD gained 0.7% on Thursday as the Greenback relaxes.
• European Retail Sales growth slowed in October, ECB rate cut expected.
• US NFP jobs additions report on Friday to draw heavy investor attention.

EUR/USD rose on Thursday, gaining seven-tenths of a percent and clawing back toward the 1.0600 handle. European Retail Sales beat median market forecasts in October, but still fell compared to the previous month. The European Central Bank (ECB) is broadly expected to deliver another quarter-point rate cut next week, and market sentiment is tilting risk-on ahead of Friday’s US Nonfarm Payrolls (NFP) jobs print.

EU rate cuts incoming, investors shrug off French turmoil for now

Pan-EU Retail Sales grew by 1.9% YoY in October, beating the forecast 1.7% but still falling back sharply from September’s revised 3.0%. Lagging economic activity figures have sparked a higher pace of rate cuts from the ECB, even in the face of rising inflation metrics. ECB President Christine Lagarde reiterated the ECB’s commitment to bolstering growth by lowering interest rates, claiming on Friday that a near-term bump in European inflation in Q4 will give way and lower again in 2025.

The ECB is widely expected to deliver another 25 bps rate cut next week, and investors are shrugging off recent political turmoil in France. French President Macron has announced he will stubbornly remain the President of France despite a recent no-confidence vote, and will instead select a new Prime Minister in the coming days.

On the US side, Initial Jobless Claims for the week ended November 29 rose to a six-week high of 224K, missing the expected print of 215K and stepping above the previous week’s revised 215K. Challenger Job Cuts in November also rose to 57.727K, but the batch of mid-tier labor data pales in comparison to Friday’s upcoming NFP print. Investors are expecting November’s NFP net jobs additions to rebound to 200K after the previous month’s stumble to 12K. October’s shockingly low print was attributed to layoffs from hurricanes and labor strikes, and investors are hoping for a healthy rebound in job gains.

EUR/USD price forecast

The EUR/USD daily chart reflects a consolidative phase following a steep downtrend that dominated the pair’s trajectory since mid-July. After peaking near 1.1270, EUR/USD witnessed a pronounced decline, breaking below key support levels, including the 200-day EMA, now at 1.0834, and the psychological 1.0600 mark. This downtrend culminated in a recent low near 1.0450 in late November, which now acts as a critical support level. However, the pair has rebounded in recent sessions, climbing above 1.0500 and showing resilience near the 1.0588 level at the time of writing.

The most recent daily candle stands out with a notable bullish body, reflecting a gain of +0.71% for the session. This candle suggests growing bullish momentum, as the pair has cleared short-term resistance levels near 1.0550, with eyes set on the 1.0600 area. Further gains could see EUR/USD testing the 50-day EMA, currently at 1.0715, a key level that aligns with the November swing high. A break above this confluence zone would likely validate a trend reversal and pave the way for a move back toward the 200-day EMA and beyond.

On the downside, the MACD indicator remains in negative territory, although the histogram is shrinking, signaling waning bearish momentum. A failure to sustain the ongoing recovery could see EUR/USD revisiting the 1.0500 support, with the critical 1.0450 low acting as a key line in the sand for bulls. Traders should watch for a daily close above 1.0600 to confirm the bullish breakout, while bearish pressure would resurface if the pair falls back below 1.0550.

EUR/USD daily chart

Euro FAQs

What is the Euro?

The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day, according to data from the Bank of International Settlements. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% of all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

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