- French government bonds steadied on Friday, boosting the euro.
- Market participants are almost entirely pricing an ECB rate cut.
- US claims rose to 224,000 last week.
The EUR/USD price analysis shows some calm in the French political scene, which has allowed the euro to recover. Meanwhile, the dollar was weak after unemployment figures in the previous session showed weakness in the labor market. Moreover, market participants await the nonfarm payrolls report for more insight into the Fed’s rate cut outlook.
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French government bonds steadied on Friday after the government collapse, boosting the euro. The government collapsed after lawmakers presented a motion of no confidence in Prime Minister Michel Barnier.
This move followed his budget, revealing punitive tax increases that would hurt consumers and businesses. As a result, the Prime Minister resigned, leaving President Emmanuel Macron in a rush to replace him.
Meanwhile, market participants are almost entirely pricing a rate cut at next week’s European Central Bank meeting. Moreover, markets will focus on the messaging regarding future rate cuts, which might impact the euro.
On the other hand, the greenback remained weak after data on Thursday revealed an unexpected jump in unemployment claims. US claims rose to 224,000 last week, beating forecasts of 215,000. As a result, markets are pricing a lower 70% chance of a rate cut in December.
Elsewhere, the US will release its nonfarm payrolls report, expected to show 195,000 new jobs in November and an unemployment rate of 4.2%. This report will shape Fed rate cut expectations.
EUR/USD key events today
- US average hourly earnings m/m
- US non-farm employment change
- US unemployment rate
EUR/USD technical price analysis: Decline pauses in a shallow wedge pattern
On the technical side, EUR/USD has paused its decline and is currently trading in a shallow bullish wedge pattern. The downtrend weakened when the price made a new low near the 1.0400 key psychological level. Since then, the price has been chopping through the 30-SMA. At the same time, the RSI has chopped through the pivotal 50 level.
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Bears might eventually break out to seek new lows if the pattern is a corrective move after the decline. However, at the moment, the price trades above the SMA within the wedge. Bulls are challenging the pattern’s resistance line. A break above would allow EUR/USD to revisit the 1.0700 resistance. Otherwise, bears will resurface to push the price back below the SMA.
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