The number of US nonfarm payrolls will decrease to 170,000.

On Friday, the Forex pair EUR/USD has not exhibited significant fluctuations, following a previous day of substantial increases. Currently, during the European session, the pair is trading at 1.0633, reflecting a slight rise of 0.10%.

All Eyes on US Nonfarm Payrolls

Since the Federal Reserve decision on Wednesday, the market has faced significant pressure. The Fed’s statement was essentially a repetition of the one made in September, with Fed Chair Powell reiterating the possibility of rate hikes. However, the markets were not convinced by Powell’s remarks, and there is a growing belief that the Fed is no longer looking to tighten policies. The ADP Employment Change report, although not considered highly reliable for nonfarm payrolls, is still closely monitored. This report showed a weak increase of 113,000 in October, well below the market’s expectation of 150,000 and lower than the September reading of 89,000.

Could nonfarm payrolls follow the trend of a release that is weaker than expected? Nonfarm payrolls had a significant increase of 336,000 in September, but the general expectation for October is only 170,000. If nonfarm payrolls fall short of expectations, it would suggest that the current period of tightening is complete. However, if there is an unexpected positive outcome, it would support the Federal Reserve’s belief that the economy is still robust and they may continue to raise interest rates. In that case, I anticipate that the US dollar would strengthen.

The Federal Reserve will also monitor the increase in wages, which can contribute to inflation. Wages increased by 0.2% from the previous month in September, and it is estimated that it will rise by 0.3% in October. On a yearly basis, wage growth is expected to slow down to 4.0% in October, compared to 4.2% in September.

The latest data in the eurozone indicate a struggling economy. French Industrial Production decreased by 0.5% in September, following a revised -0.1% in August, falling short of the market expectation of no change. In Spain, unemployment increased significantly to 36,900 in October, compared to 19,800 in September, reaching its highest level since April.

EUR/USD-4-Hour Chart

EUR/USD Technical

• There is resistance at 1.0664 and 1.0764

• Support is being provided by 1.0595 and 1.049509