- The EUR/USD outlook remains positive above 1.1700 amid softer dollar.
- The markets await key US NFP data as any surprise could shake the markets either way.
- ECB’s hold and dovish Fed continue to support the EUR/USD in the near term.
The euro trades near recent highs against the US dollar as markets wait for key US data. EUR/USD holds above the 1.1700 level, while the Dollar Index (DXY) stays under pressure near 98.25 during European session.
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The dollar remains weak as investors focus on the delayed US employment report. The Nonfarm Payrolls data for October and November is due later today, which could shape expectations for US interest rates. Traders expect job growth of around 40,000 in November, with the unemployment rate seen holding at 4.4%. Wage data will also attract attention after average earnings rose 3.8% YoY in September.
Any sign that the labor market is losing momentum would reinforce expectations of further Fed cuts next year. Such an outcome would likely keep the dollar on the defensive and support EUR/USD. However, a stronger report could slow the euro’s advance by pushing back against aggressive easing bets.
Last week’s FOMC meeting set the tone as the Fed delivered its third rate cut of the year, lowering rates to a 3.50%–3.75% range. Chair Jerome Powell acknowledged signs of cooling in the labor market and noted the central bank is now well placed to wait and assess incoming data. Markets interpreted his remarks as dovish, even though several officials later warned about inflation risks.
Recent US data has added to concerns about slowing employment. Initial jobless claims rose sharply, private payrolls fell unexpectedly, and services activity showed only modest growth. Layoff announcements have also increased. These signals have kept pressure on the dollar and helped the euro regain ground.
On the European side, attention turns to flash PMI data from Germany and the wider Eurozone. The services sector is expected to slow slightly, while manufacturing remains in contraction. Even so, overall business activity could stay above the expansion threshold. Traders see these figures as important for near-term euro sentiment, though they do not expect them to shift European Central Bank policy.
Markets broadly expect the ECB to keep rates unchanged through 2026. Policymakers continue to argue that the current stance is appropriate and have avoided strong guidance on future moves. This steady approach has reduced volatility in the euro, especially against a softer dollar.
EUR/USD Technical Outlook: Correction Amid Overbought RSI
The EUR/USD 4-hour chart reflects the odds of a corrective downside as the pair formed a minor doji candle, with RSI retreating slowly from the overbought area. However, the price is still above the 20-period MA near 1.1735, keeping the upside bias intact.
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In case of a bearish turn, the price could find adequate support at 1.1685, a horizontal level coincided with the 50-period MA. Meanwhile, on the upside, immediate resistance lies at yesterday’s top around 1.1770 ahead of 1.1800.
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