EUR/USD Price Analysis – Dec 06, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair struggled to break its downward trend, remaining under pressure around the 1.0579 level and hitting an intra-day low of 1.0566.
The recent weakness in the pair can largely be attributed to ongoing political turmoil in France, which has kept investors on edge. Additionally, cautious sentiment ahead of the upcoming US Nonfarm Payrolls (NFP) report is offering some support to the US Dollar.
The Greenback saw some selling pressure on Thursday, as a positive risk sentiment and a larger-than-expected rise in weekly Jobless Claims weighed on the USD.
This came after a string of disappointing US data, including weaker-than-expected performance in the services sector and disappointing ADP employment figures, further adding to the selling pressure on the Dollar.
As a result, the EUR/USD pair remains in a tight range, waiting for fresh catalysts to drive its next move.
Impact of US Labor Market Data and Fed's Rate Cut Speculation on EUR/USD Pair
On the US front, the broad-based US Dollar has been under some pressure as markets await the November Nonfarm Payrolls (NFP) report, with expectations for a solid increase of 200,000 jobs.
This comes after a much lower reading of 12,000 jobs in October, which was heavily impacted by hurricanes and strikes. Despite this positive outlook, some concerns remain about the strength of the labor market due to other recent data.
On the data front, the US Unemployment Rate is expected to rise slightly to 4.2% in November, up from 4.1% in October. This increase is likely to keep hopes alive for a 25 basis point interest rate cut by the Federal Reserve (Fed) in December.
In addition, data released on Thursday showed a rise in weekly Jobless Claims, which increased to 224,000 from the previous week's 215,000. This, along with a disappointing ADP employment report on Wednesday, has led to some doubts about the strength of the upcoming NFP data.
Federal Reserve Chairman Jerome Powell, however, remains cautious about cutting rates too quickly. He mentioned earlier this week that the US economy is stronger than the Fed had anticipated when it started easing rates.
Powell emphasized that any interest rate cuts will be gradual, signaling a more measured approach as the central bank assesses the economic outlook.
Therefore, the uncertainty around the US labor market and potential Fed rate cuts could weigh on the US Dollar, potentially supporting the EUR/USD pair. A weaker Dollar could boost the Euro, especially if the Nonfarm Payrolls report underperforms expectations.
Political Instability in France Weighs on Euro Recovery Prospects
On the other hand, French President Emmanuel Macron is facing growing challenges as his leadership is increasingly questioned. He is struggling to find a prime minister amid a deeply divided parliament, with far-right candidate Marine Le Pen gaining more support.
This political instability adds uncertainty to the country’s future direction. While markets have become less worried about France’s debt risk, the ongoing political tension creates a difficult environment for the Euro to recover significantly.
As a result, the overall outlook for the Euro remains cautious, and any substantial recovery seems unlikely in the near term.
EUR/USD – Technical Analysis
EUR/USD is trading at 1.05769, down 0.08%, showing mild bearish momentum as it approaches the key pivot point at 1.06053. Despite the slight decline, the pair remains supported by broader market sentiment favoring a weaker dollar amid cautious optimism surrounding global economic conditions.
On the upside, immediate resistance is seen at 1.06545, followed by 1.06927 and 1.07292, marking key levels to confirm further bullish momentum.
Conversely, support is positioned at 1.05221, with additional cushions at 1.04738 and 1.04254, where traders may look for stabilization if selling pressure intensifies.
The 50-day EMA at 1.05306 provides robust near-term support, reinforcing the broader outlook. A decisive break below 1.06053 could trigger selling pressure, targeting support at 1.05221 and lower.
However, regaining ground above the pivot point may signal a recovery, with a breakout above 1.06545 opening the path to higher resistance zones.
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