EUR/USD analysis: market to gyrate around US NFP and Government shutdown

EUR/USD Current price: 1.1791

  • US November employment data to confirm solid developments in the sector.
  • US government at risk of shutting down.

The EUR/USD pair saw little change this Thursday, although the pair extended its latest decline to a fresh 2-week low of 1.1775. Macroeconomic data released this Thursday had little influence on the pair, as investors are focused on upcoming first-tier events coming ahead, starting Friday with the US Nonfarm Payroll report, but most relevant, the Fed and the ECB's monetary policy meetings next week. The EU Q3 GDP revision confirmed growth at 0.6% in the three months to September, although the annual reading was revised higher, to 2.6% from previous 2.5%. In the US, companies announced plans to cut 35,038 jobs in November, well above October's 29,831, also well above November 2016 level, although for the year,  employers announced just over 386,347 layoffs, the lowest since 1997. Also, weekly jobless claims fell to 236K in the week ended December 1st, below the previous 238K or the expected 240K.

The US will release its November employment data this Friday and the country is expected to report 200,000 new jobs were added, while the unemployment rate is expected at 4.1%. Average hourly earnings are forecast to rise 0.3% in the month, while compared to a year earlier, growth in hourly earnings is expected to accelerate to 2.7% in November from 2.4% the previous month. Such readings will give support to the greenback, as they will be enough to keep the Fed on the rate hike path next week.

The pair was unable to recover beyond the 1.1800 threshold, the 61.8% retracement of its latest bullish run, and maintains a bearish stance heading into the Asian opening and according to the 4 hours chart, as the price remains below its 20 and 100 SMAs, with the shortest crossing below the largest, while technical indicators present modest bearish slopes within negative territory. The pair has an immediate static support at 1.1750, followed by November 21st low at 1.1712. A break below this last seems unlikely with just the NFP report, although the greenback may get an additional boost if the US Senate manages to extend the debt ceiling and avoid a government shutdown.

Support levels: 1.1750 1.1715 1.1675

Resistance levels: 1.1800 1.1830 1.1860

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