The United States Bureau of Labor Statistics (BLS) will release its highly anticipated Nonfarm Payrolls (NFP) data for November on Friday at 13:30 GMT. This crucial employment report will play a significant role in shaping expectations for future Federal Reserve interest rate decisions and guide the direction of the US Dollar (USD) in the coming months.
What to Expect from the November Jobs Report?
Economists are forecasting that the US economy added 200,000 jobs in November, marking a strong rebound from October’s modest gain of just 12,000. The October figure was distorted by disruptions, including the impact of two hurricanes and a strike at Boeing.
The Unemployment Rate (UE) is expected to tick higher to 4.2% from the previous month’s 4.1%, while wage inflation, measured by Average Hourly Earnings (AHE), is predicted to rise by 3.9% year-over-year, slightly slower than October’s 4.0% growth.
The November employment report is seen as a critical barometer for the state of the US labor market, with analysts closely watching it for clues about the Fed’s next steps. The data will be particularly important after recent comments from Federal Reserve Chairman Jerome Powell, who signaled caution about aggressive rate cuts despite the ongoing economic expansion. In a Dallas speech last month, Powell emphasized that the job market remains solid and inflation is still above the Fed’s 2% target, suggesting that rate cuts may not be imminent.
However, market expectations are leaning towards further easing, with the CME Group’s FedWatch tool pricing in a 75% chance of a 25 basis point rate cut at the Fed’s December meeting. TD Securities analysts, meanwhile, have projected that November’s job report will show a rebound from the disruptions seen in October, estimating around 75,000 jobs added as the impacts of the hurricanes and the Boeing strike fade.
Potential Impact of the NFP Report on the US Dollar
The NFP release will have immediate implications for the US Dollar and global markets. If the report shows job growth below expectations (i.e., below 200,000), the USD could face significant selling pressure as it would fuel expectations of further easing by the Federal Reserve. In such a scenario, EUR/USD could see a short-term rally toward the 1.0700 level.
Conversely, a stronger-than-expected NFP reading coupled with elevated wage growth data could raise concerns about future inflationary pressures and limit the Fed’s ability to cut rates. This could push the USD higher and weigh on EUR/USD, possibly sending the pair back toward the 1.0400 level.
Technical Outlook for EUR/USD
Looking at the technical side, EUR/USD is currently testing key resistance levels. According to Dhwani Mehta, FXStreet’s Asian Session Lead Analyst, EUR/USD needs to break decisively above the 21-day Simple Moving Average (SMA) at 1.0560 to extend its recovery toward the 1.0700 round level. If the pair manages to clear this hurdle, the next target will be the 50-day SMA at 1.0761, followed by the 200-day SMA at 1.0845.
However, Mehta warns that the 14-day Relative Strength Index (RSI) remains below the neutral 50 level, which indicates continued risks to the downside for EUR/USD. If the pair fails to maintain support above the 1.0400 mark, further declines could test the November 22 low of 1.0333.
As traders await the November NFP report, all eyes will be on the jobs data for clues on the Fed’s monetary policy trajectory, with the outcome likely to trigger significant movements in the US Dollar and EUR/USD pair.
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