Talking Points

• US Data beat expectations, Nonfarm Payroll breakdown
• Technical analysis for EURUSD Daily Chart
• Conclusion, What’s next for EURUSD Price?

US Data beat expectations, Nonfarm Payroll breakdown

The November Nonfarm payroll numbers released this morning were better than expected, the US economy added 199K jobs last month, slightly above the median forecast of 185K jobs and the Unemployment Rate fell to 3.7% compared to the consensus of 3.9% supporting the theory that the US job market remains hot for now. It doesn’t end there, the “Average Hourly Earnings” rose to 0.4% reflecting the fact that inflation fears remain in place and adding more weight to US CPI numbers expected next week. Markets remain divided on the next FED moves and the number of rate cuts in 2024 if any, however, as the data release continues, the traders’ sentiment may change to favor a side.

Although the NFP’s overall number was better than expected and is in line with the average for 2023, the breakdown of the non-farm payroll numbers for November 2023 is different when compared to November 2022, we had better-than-expected numbers in 3 categories which may be reasoned. Healthcare and Education jobs which are considered “Essential Jobs” rose from 96K to 99K. The Trade, transportation, and utilities lost -35K compared to -74K, although better than expected but still represents lost jobs. The Manufacturing jobs added 28K jobs, however, this is due to the auto workers returning, with that said, the overall data remains strong and reflects the US economic strength.

Technical analysis for EURUSD Daily Chart

• EUR/USD is trading within an ascending channel and continued to find support multiple times along the lower channel borders, Price broke out of the channel’s upper border, however after a failed bullish attempt, price retraced back to trade within the channel and is currently finding support at 1.0760 above the lower border.
• The daily candle tested the lower channel border at 1.0720 and retraced back up to form two opposite candlestick patterns highlighting the market’s indecision mode.
• If the price continues to find support along the channel’s lower borders, the next resistance levels would be critical as the price will encounter two confluence of resistances, the first represented by Weekly S1 and the monthly pivot point within the range of 1.0780 – 1.0807 and a second confluence of resistance within the range of 1.0880 – 1.0910 where the price may intersect with 3 commonly followed Moving averages, its weekly pivot, and the upper channel border.
• MACD is in line with price action, however, its histogram is close to its extreme and the 2 averages may converge.
• Non-smoothed RSI is at its oversold territory with a slight potential positive divergence under construction.
• The latest COT report shows Large Speculators continued to add long positions as the price declined, reflecting a potential change in sentiment and a possible reversal, on the other hand, it must be said that EURO futures large speculator’s long positions are near their extremes.

Conclusion, What’s next for EURUSD Price?

The EURO’s price in 2024 will be influenced by how the EU, the US, and the global economies perform, it won’t be the first time to see the Euro gaining momentum on favorable US Data. Another main factor that may influence the EUR/USD price would be the future interest rate path expectations for the FED and the ECB. The initial reaction on EUR/USD Prices after today’s news was a decline from 1.0780 to 1.0720 and closed the week mid-range at 1.0760.

Although the price action is attempting a bullish reversal at this point which may work out, we need to watch if price action breaks below the ascending channel, this is because looking at the chart in the context of prior price action, it can appear differently, the ascending channel can simply be a rising wedge for the downtrend beginning in July 2023. (Red line)

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