U.S. NFP Data Key for EUR/USD as Market Awaits Jobs Report; 113,000 Jobs Expected

The EUR/USD closed Thursday in positive territory for the fourth consecutive day, buoyed by softening sentiment around the U.S. Dollar (USD).

Investors anticipate a crucial update on the U.S. labor market with the Nonfarm Payrolls (NFP) report for October, scheduled for release in the early American session.

After fluctuating below the 1.0900 level on Friday, the pair’s direction hinges on the NFP print, which is forecasted to add 113,000 jobs in October, following September’s robust increase of 254,000.

EUR/USD extends upside above 1.0850, with all eyes on US NFP data

— Market info (@allmarketinfo) November 1, 2024

A disappointing report below 100,000 jobs could deepen the USD’s weakness, providing room for EUR/USD to push higher. However, a stronger-than-expected print above 150,000 could lend support to the USD, making it challenging for EUR/USD to maintain its uptrend as traders weigh economic momentum.

Mixed Economic Data Weighs on USD Sentiment, Boosting EUR/USD

The EUR/USD received an additional boost on Thursday due to mixed U.S. economic data, which signaled a nuanced outlook for the USD. Initial Jobless Claims dropped by 12,000 to 216,000 for the week ending October 26, indicating continued strength in the labor market.

However, the Employment Cost Index showed a 0.8% rise in the third quarter, falling short of the 0.9% increase expected, suggesting mild wage pressures.

In contrast, data from Europe provided some positive surprises, with Germany’s Retail Sales up 1.2% month-over-month, surpassing forecasts. Meanwhile, core inflation in the Eurozone remained steady at 2.7% year-over-year, in line with expectations.

This mix of economic signals has set the stage for potential EUR/USD volatility ahead of the NFP report, as traders gauge the relative strength of both economies.

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NFP’s Market Impact and Investor Sentiment

The U.S. labor report holds added significance this month as traders adjust their positions in anticipation of the Federal Reserve’s upcoming policy meeting and the presidential election.

Market participants are likely to react strongly to the NFP results, given its implications for interest rate policy and broader economic sentiment.

A breakdown of potential scenarios for the EUR/USD based on the NFP report:

• Below 100,000 jobs: Likely to fuel USD sell-off, enabling EUR/USD to climb past 1.0900.

• Between 100,000 and 150,000 jobs: May keep EUR/USD stable, with limited movement in either direction.

• Above 150,000 jobs: Could strengthen USD, pressuring EUR/USD back below key support levels.

Key Takeaways:

• Expected Jobs Growth: NFP forecast at 113,000 for October, with strong implications for USD.

• Economic Indicators: U.S. Initial Jobless Claims fell, while Eurozone inflation remains steady.

• Market Sentiment: Investors preparing for potential volatility as they await the NFP report.

The EUR/USD’s near-term outlook will depend heavily on the NFP data. A miss could see further USD weakness, while a strong report may solidify USD resilience.