Market Analytics and Technical Considerations
Key Points
Over 1.0500, the EUR/USD has begun to consolidate its weekly advances.
In November, it is anticipated that nonfarm payrolls would increase by 200,000 in the US.
The pair is about to become essentially overbought, according to the short-term technical landscape.
After reaching its high degree of June at 1.0540 earlier in the day, the EUR/USD pair entered a consolidation phase at 1.0500 early on Friday. The US jobs report for November may increase the volatility of the pair in the early American day.
According to information released on Thursday by the US Bureau of Economic Analysis, personal consumption spending (PCE) price index inflation in the US decreased from 6.3% in September to 6% in October. The US Dollar continued to decline against its main competitor as a result of this reading coming in below the consensus forecast of 6.2%.
After the ISM reported that the Manufacturing PMI fell from 50.2 in November to 49, the USD selloff accelerated later in the afternoon. More significantly, the PMI survey’s Price Paid element fell to 43, indicating a slowdown in the sector’s component inflation.
The US Dollar Index has already decreased with more than 1% this week as traders prepare for the November jobs report. Despite a better-than-expected 261,000 increase in October, nonfarm payrolls (NFP) are predicted to climb by 200,000.
Given the promising October NFP number, the US Dollar found it hard to find buyers because the report’s details showed that yearly wage inflation dropped from 5% in September to 4.7% in October. Consequently, a comparable market response might be anticipated. The USD may come under further price pressure if the NFP doesn’t significantly meet market expectations, especially if wage inflation slows down more. On the other hand, an NFP reading above 250,000 along with an unforeseen rise in average hourly earnings (YoY) could lead the EUR/USD to decline before the break.
The 4 chart’s Relative Strength Index (RSI) indicator remains within striking range of 70, indicating that the pair may perform a technical adjustment just before subsequent step upward. Intermediate resistance on the upside appears to have developed at 1.0540. Additional increases could be seen to 1.0600 (psychological level, static tier), and 1.0630 (stationary level), if buyers are successful in turning that threshold into support.
Initial support is aligned at 1.0500 (psychological point of former resistance). The pair may move into the 1.0410/1.0390 region, where the 20-period and the 50-period Simple Moving Averages are situated, with a 4 closing below that level.
